ECB Cuts Rates for Second Straight Meeting to Combat Inflation and Economic Slowdown

The European Central Bank (ECB) reduced interest rates by a quarter point at its second consecutive meeting on Thursday, aiming to address sluggish inflation and weak economic growth. This marks the first back-to-back rate cut in 13 years, signaling a shift in the ECB’s policy focus from controlling inflation to stimulating the Eurozone economy, which has been lagging behind the U.S. for the past two years.

“The incoming information on inflation shows that the disinflationary process is well on track. The inflation outlook is also affected by recent downside surprises in indicators of economic activity,” the ECB stated.

The 25-basis point reduction lowers the rate the ECB pays to banks for deposits to 3.25%, further widening the gap with the U.S. Federal Reserve, which cut its target rate by 50 basis points last month to a range of 4.75% to 5.00%.

Following the announcement, which was expected by markets, the euro traded relatively unchanged against the dollar.