ECB lowers rates again but hints more cuts in doubt

FRANKFURT: The European Central Bank cut interest rates again Thursday to boost the struggling eurozone but suggested easing could be nearing an end and warned of “rising uncertainty” amid massive German spending plans and US tariff threats.

It was the central bank’s six reduction since June last year, with its focus having shifted from tackling inflation to providing relief for the single currency area, which has been eking out meagre growth.

The quarter-percentage-point reduction brought the Frankfurt-based institution’s benchmark deposit rate to 2.5 percent.

The rate reached a record of four percent in late 2023 after the ECB launched a furious hiking cycle to tame energy and food costs that surged in the wake of Russia’s invasion of Ukraine.

In a statement announcing the decision, the ECB said the process of inflation coming down was “well on track” and it believed that it would settle around the central bank’s two-percent target.

Eurozone inflation eased slightly to 2.4 percent in February.

But it a sign of continuing price pressures, the ECB raised its inflation forecast for this year to 2.3 percent from a previous prediction of 2.1 percent.