Europe cuts its interest rate as inflation drops below target

The European Central Bank on Thursday cut its main interest rate again, citing falling inflation.

The European Central Bank on Thursday cut its main interest rate again, citing falling inflation. The widely anticipated move takes the ECB’s main rate to 2%, from 2.25% previously, and marks the eighth time the central bank has slashed the cost of borrowing since last June as inflation has tumbled from multi-decade highs. Year-on-year consumer price inflation across the 20 countries using the euro dropped to 1.9% last month — falling below the ECB’s 2% target for the first time since September. The decision risks provoking further attacks by President Donald Trump on the Federal Reserve for not following suit and lowering borrowing costs in the United States. The Fed has kept interest rates steady in recent months, opting to wait and see how the president’s trade war will impact the world’s largest economy before deciding whether to cut or raise rates. Trump has used the ECB’s recent rate cuts as a cudgel with which to pressure Fed Chair Jerome Powell. “‘Too Late’ Powell must now LOWER THE RATE. He is unbelievable!!! Europe has lowered NINE TIMES!” Trump wrote in a social media post Wednesday in anticipation of the ECB’s decision. (Fact check: The ECB had by that point cut its main rate seven times since it started lowering borrowing costs in June 2024).