ECB Cuts Rates Amid US Tariff Escalation

The European Central Bank (ECB) has cut its main interest rate by 0.25 percentage points to 2.25%, marking its seventh reduction in a year amid escalating trade tensions from US tariffs. The ECB cited slowing euro area GDP growth of just 0.2% in the last quarter and inflation falling to 2.2%, near its target. The rate cut is intended to support the economy by making borrowing cheaper, countering the negative effects of tariffs and trade uncertainty on exports and investment. President Christine Lagarde highlighted worsening global trade tensions as a risk to growth. The ECB also removed the term 'restrictive' from its policy statement and emphasized a data-dependent, meeting-by-meeting approach. Analysts anticipate further rate cuts could occur if US trade policy uncertainty continues.