ECB Cuts Rates Again Amid Growing Economic Strain

The European Central Bank (ECB) has delivered its seventh interest rate cut in a year, aiming to shield the eurozone economy from ongoing trade tensions and weakening growth.

ECB cuts rates again to counter trade shocks and weak growth

Responding to Uncertainty

On April 17, the ECB lowered its deposit rate by 25 basis points to 2.25%, a move widely expected by markets. ECB President Christine Lagarde emphasized the importance of staying flexible in the face of global unpredictability, particularly as U.S. trade policy continues to cause volatility.

“We have to be ready for the unpredictable,” Lagarde said during a press conference, pointing to shaken consumer and business confidence.

A Shift in Stance

The ECB also dropped its previous reference to interest rates being “restrictive,” signaling that policy is now seen as more neutral—neither actively boosting nor holding back growth. The latest move reflects how falling inflation and tighter financial conditions are reshaping the economic outlook.

Inflation Forecasts Fall

While the ECB once expected trade tensions to push inflation higher, current trends suggest otherwise. A stronger euro, lower energy prices, and slowing global demand—particularly from China—are now dragging inflation down.

More Cuts on the Horizon?

With growth faltering and inflation easing, investors are now pricing in more action from the ECB. Many anticipate at least two more rate cuts by the end of the year as the central bank continues to navigate an uncertain global landscape.