ECB Cuts Interest Rates Amid Inflation Moderation

The European Central Bank, led by Christine Lagarde, reduced the three key interest rates by 25 basis points, aiming to stabilize inflation at its two percent medium-term target. While economic growth remains weak, moderating wage pressures and easing financing conditions are expected to support demand recovery.

In a strategic move to stabilize inflation, the European Central Bank (ECB) has cut its three key interest rates by 25 basis points. This decision, announced by ECB President Christine Lagarde, aims to align inflation with the targeted two percent medium-term goal amidst ongoing economic challenges.

The current economic landscape is marked by stagnation and subdued growth prospects, notably in manufacturing, while the service sector expands. Consumer confidence is fragile, yet rising real incomes and more affordable credit are poised to bolster spending over time.

Lagarde emphasized the ECB's data-driven approach, expressing readiness to adjust monetary policy as needed to preserve its transmission mechanism and achieve inflation sustainability. The outlook remains cautious with potential risks from geopolitical tensions and global trade disruptions.

(With inputs from agencies.)