Amidst speculation about her future, ECB President Christine Lagarde affirmed her commitment to her term as the European Central Bank slashed its main interest rate to 2%. This move, the eighth quarter-point cut in a year, aims to bolster flagging eurozone growth, which is struggling under the weight of global trade conflicts.
The 20-member currency bloc has experienced a noticeable slowdown in economic activity, with major economies facing subdued growth and a weak outlook for the coming year. The rate cut is intended to make borrowing more affordable, thereby stimulating investment and consumption across the region.
The ECB’s decision was also prompted by eurozone inflation falling below its 2% target. While acknowledging the negative impact of trade tariffs, the central bank anticipates that increased government spending on defense will provide some economic support. Lagarde, while cautious about the “significant uncertainty” in the global economy, highlighted the resilience of the labor market and robust private sector balance sheets as crucial factors in navigating the current environment.