The European Central Bank has cut interest rates for the seventh time in a row to counter worries about economic growth fuelled by President Donald Trump’s tariff onslaught.
“The outlook for growth has deteriorated due to rising trade tensions,” the bank said on Thursday.
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 per cent.
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 centre stage.
The economy in the 20 countries that use the euro grew a modest 0.2 per cent in the last three months of 2024.
Inflation was 2.2 per cent in March, close to the bank’s target of 2 per cent.
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 per cent and ranging as high as 49 per cent.
The European Union faces a 20 per cent tariff.
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