ECB Reduces Key Interest Rates to 2.25% Amid Trade War Concerns

The European Central Bank (ECB) has cut its key interest rates by 0.25 percentage points, lowering its benchmark rate to 2.25% in response to mounting trade tensions and economic uncertainties. This move, aligned with economists’ expectations, aims to support growth as the euro area faces risks from escalating US tariffs and global trade disputes, which have negatively affected both exports and investment. The ECB underscored that inflation is trending toward its 2% medium-term target, citing continued disinflation and a moderation in wage growth. However, the bank warned that ongoing trade tensions and market volatility could further dampen confidence among households and businesses, threatening the region’s economic outlook. The ECB reaffirmed its commitment to a data-dependent approach, signaling readiness to adjust policy as needed to maintain monetary stability. This rate cut is expected to provide some relief to borrowers and reflects the ECB's broader strategy to bolster economic resilience amid persistent challenges.