Europe's Fragile Economy Faces Challenges Amid Rate Cuts and Political Turmoil

The European Central Bank has reduced its key interest rate to support a stagnating economy amid high inflation and political instability in Germany and France. The decision contrasts with the US Federal Reserve's approach, highlighting divergence in economic performance between the US and Europe.

The European Central Bank made a decisive move on Thursday by cutting its key interest rate, aiming to boost an economy grappling with stunted growth. This decision comes as inflation keeps consumers wary, and businesses navigate uncertainties in major economies like France and Germany.

This rate cut stands in contrast to the US Federal Reserve's recent decision to maintain their rates, underlining the disparity between the US's solid economic growth and Europe's stagnation, evidenced by zero growth in the eurozone by late last year.

At a meeting in Frankfurt, Germany, the ECB's council reduced the benchmark rate to 2.75%, prioritizing economic growth over inflation fears, even as inflation remains above the target. Political unrest and economic caution continue to challenge key European economies, posing questions about future prospects.

(With inputs from agencies.)