ECB's Strategic Pivot: Rates Slashed Amid Economic Struggles

The European Central Bank cut interest rates for the third time this year amid controlled inflation and a weakening economy. Lagarde stated the potential for further cuts as inflation stabilizes and economic challenges persist. ECB’s actions counteract low growth and high interest rates.

The European Central Bank (ECB) made a significant shift by reducing interest rates for the third time this year, a move aimed at addressing the worsening economic outlook despite inflation appearing to be under control.

ECB President Christine Lagarde indicated that recent data supports the decision, with business activity and inflation readings continuing on a downward trend. Lagarde also addressed potential risks such as U.S. tariffs and Middle East conflicts impacting oil prices, but stressed the ECB is not anticipating a recession.

The recent quarter-point reduction lowers the deposit rate to 3.25%, with markets anticipating further cuts. The ECB remains focused on stabilizing inflation while encouraging economic reforms to address structural challenges.

(With inputs from agencies.)