ECB cuts interest rates to 2% as inflation cools

Brussels: The European Central Bank's rate-setting council on Thursday cut the institution's benchmark rate a quarter-point to 2% as it seeks to stimulate the eurozone's struggling economy.

The reduction comes with growth slow to pick up and further gloom over US President Donald Trump's most recent threat to raise tariffs on goods from the European Union to 50%.

As it announced the rate decision, the ECB was measured in its tone about the US levies and possible retaliation. 

It said the "uncertainty surrounding trade policies is expected to weigh on business investment and exports," while adding that "rising government investment in defence and infrastructure will increasingly support growth over the medium term."

"Higher real incomes and a robust labour market will allow households to spend more. Together with more favourable financing conditions, this should make the economy more resilient to global shocks."

However, the bank left its growth forecast for 2025 unchanged at 0.9%.

The widely expected move is the seventh consecutive reduction and eighth cut since June last year, when the bank began lowering borrowing costs.

Monetary policymakers also lowered their inflation forecast for 2025, with consumer price increases now expected to hit the central bank's 2% target this year.

More to come...