ECB Cuts Interest Rates Again as Trade Tensions Threaten Recovery

The European Central Bank (ECB) lowered interest rates for the seventh time since June 2024 as trade tensions threaten to derail the region's economic recovery.

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FRANKFURT - The European Central Bank (ECB) lowered interest rates for the seventh time since June 2024 as trade tensions threaten to derail the region's economic recovery.

The deposit rate was decreased by a quarter point to 2.25 per cent, as predicted by almost all analysts polled by Bloomberg. The ECB dropped the word "restrictive" from its statement in relation to the monetary policy stance. But markets boosted bets on further cuts in borrowing costs as officials underscored the headwinds that Europe currently faces.

"Downside risks to economic growth have increased," ECB president Christine Lagarde told reporters on April 17 in Frankfurt, stressing that it will still take time for the full consequences of US tariffs to become clear.

"The major escalation in global trade tensions and associated uncertainties will likely lower euro area growth by dampening exports, and it may drag down investment and consumption," she said. "Deteriorating financial market sentiment could lead to tighter financing conditions."