ECB cuts interest rates to 3%

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The European Central Bank (ECB) slashed interest rates for the fourth time this year amid concerns for weaker growth and the impact of Donald Trump’s trade policies.

ECB lowered rates by a quarter-point to 3%, as expected, to reach its lowest level since March 2023.

The bank warned that the eurozone economy might grow by only 1.1% next year, compared to its September estimate of 1.3%. Inflation was also forecast to reach 2.4% this year, down from its previous forecast of 2.5%, ahead of declining to 2.1% in 2025 and 1.9% in 2026.

ECB’s board is set to ensure that inflation stabilizes sustainably at its medium-term target of 2% and will adopt a data-dependent, meeting-by-meeting approach to determining the appropriate monetary policy stance."

However, the bank dropped its repeated message that it needs to keep interest rates sufficiently restrictive for as long as necessary.

Markets are now awaiting the press conference by Christine Lagarde.