FRANKFURT, Germany (AP) — The European Central Bank has cut interest rates by another quarter percentage point to boost growth, lowering credit costs for consumers and businesses to support an economy that is struggling to grow - and could soon face
FRANKFURT, Germany — The European Central Bank has cut interest rates by another quarter percentage point to boost growth, lowering credit costs for consumers and businesses to support an economy that is struggling to grow - and could soon face even stronger headwinds from threatened U.S. tariffs.
That is already having an impact, said ECB head Christine Lagarde, who said that tariffs “are not good at all and are net negative on pretty much all accounts.” As inflation has fallen to an annual 2.4%, concern has shifted to weak growth prospects in the 20 countries that use the euro currency. The eurozone showed zero growth in the last three months of 2024, and prospects for this year are muted amid uncertainty U.S. trade policy.
She acknowledged conflicting pressures ahead from a trade conflict that could depress growth and the prospect of more government spending on defense, which could boost growth but also inflation. Those two forces could push the ECB in opposite directions: a hit to growth would call for lower rates in months ahead, while more persistent inflation would argue for keeping rates higher in coming months.
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