ECB boss Christine Lagarde cuts interest rates for the fourth time this year as the EU stumbles
The European Central Bank (ECB) has cut interest rates for the fourth time this year, as the continent’s floundering economy faces political conflict and possible US tariffs.
The reduction of a quarter of a percentage point from 3.25 percent to 3 percent brings interest rates to the lowest level since May 2023.
The ECB opened the door to further cuts by toning down language on the need to keep interest rates ‘restrictive’, and warned of a bleak outlook. It comes as the US Federal Reserve is set to cut interest rates next week.
The Bank of England has been more cautious despite low inflation and traders see only a one in ten chance that the Bank will cut rates next week.
Inflation battle: European Central Bank President Christine Lagarde said efforts to reduce inflation – now at 2.3% – are paying off
Yesterday’s ECB decision came as Germany and France, Europe’s two largest economies, battle weak growth and political instability.
In France, Prime Minister Michel Barnier was forced to resign by a vote of no confidence. And Europe will likely be hit hard if Donald Trump imposes strict import duties.
The ECB expects growth for the euro zone of 0.7 percent this year, downgraded from 0.8 percent. and 1.1 percent compared to 2025, revised from 1.3 percent.
ECB President Christine Lagarde said efforts to reduce inflation – now 2.3 percent – were paying off, but that they foresaw “a slower economic recovery” amid “uncertainty… in abundance” ‘.
DIY INVESTMENT PLATFORMS
A. J. Bell
A. J. Bell
Easy investing and ready-made portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free fund trading and investment ideas
interactive investor
interactive investor
Invest for a fixed amount from € 4.99 per month
Sax
Sax
Get £200 back in trading fees
Trade 212
Trade 212
Free trading and no account fees
Affiliate links: If you purchase a product, This is Money may earn a commission. These deals have been chosen by our editors because we believe they are worth highlighting. This does not affect our editorial independence.