European Central Bank delivers rate cut for 7th straight time
People walk into the headquarters of the European Central Bank in Frankfurt am Main, western Germany, past a giant euro logo ahead of the eurozone's monetary policy meeting, Thursday. AFP-Yonhap
The European Central Bank cut interest rates Thursday for the seventh time in a row to counter worries about economic growth fueled by U.S. President Donald Trump’s tariff onslaught.
The bank said in a statement that “the outlook for growth has deteriorated due to rising trade tensions.”
It cited “exceptional uncertainty” about the future economic situation, saying future rate decisions would be taken on a meeting by meeting basis.
The bank’s move should support economic activity in the 20 countries that use the euro currency by making credit more affordable for consumers and businesses.
The bank’s rate-setting council decided at a meeting in Frankfurt to lower its benchmark rate by a quarter percentage point to 2.25 percent. The bank has been steadily cutting rates after raising them sharply to combat an outbreak of inflation from 2022 to 2023.
Now that inflation has fallen, growth worries have taken center stage. The economy in the 20 countries that use the euro grew a modest 0.2 percent in the last three months of 2024. Inflation was 2.2 percent in March, close to the bank’s target of 2 percent.
The cut was widely expected by analysts given the sudden shadow cast over the eurozone’s growth outlook by Trump’s April 2 announcement of unexpectedly high tariffs, or import tax, on goods from other countries starting at 10 percent and ranging as high as 49 percent. The European Union faces a 20 percent tariff.