European Central Bank Cuts Rates as Trade Tensions Weigh on Outlook, Inflation Eases

Facing softer inflation and rising risks to the economic outlook, the ECB has cut rates and called on governments to pursue reforms.

The European Central Bank (ECB) headquarters in Frankfurt, Germany, on March 6, 2025. Jana Rodenbusch/Reuters

The European Central Bank (ECB) has cut interest rates by 25 basis points, citing easing inflation and rising downside risks to economic growth, including escalating global trade tensions and weakening business confidence across the euro area.

The decision, announced on April 17, lowers the ECB’s deposit facility rate to 2.25 percent, bringing it to the upper end of what policymakers have previously described as a “neutral” range—one that neither stimulates nor restricts growth.