The European Central Bank cut interest rates for the eighth time in a year on Thursday, lowering the rate it pays on bank deposits from 2.25% to 2.0%.
The new rate is now in the middle of the range the bank sees as neutral, meaning it neither boosts nor slows the economy.
The ECB also cut the rate at which banks can borrow at its weekly auctions to 2.15% from 2.40%, and the overnight lending rate to 2.40% from 2.65%.
The bank said it will take a data-dependent, meeting-by-meeting approach to future decisions, keeping all options open for upcoming meetings. Some policymakers and investors expect no change at the next meeting in July.
Euro zone inflation has returned to the ECB’s 2% target, with price growth in services also slowing. This shift allows the bank to focus more on the region’s weak economic outlook.
The ECB said business investment and exports are likely to be affected by uncertainty over trade policy, especially in the short term. But it expects higher government investment in defence and infrastructure to support growth in the medium term.
The euro zone faces added pressure from U.S. President Donald Trump’s tariff threats, which have raised concerns about a potential trade war.
Attention is now on ECB President Christine Lagarde’s press conference scheduled for 1245 GMT.
