ECB Cuts Deposit Rate To 2%

The European Central Bank (ECB) lowered its deposit rate by a quarter point to 2% as it nears the end of its interest-rate cutting cycle, according to President Christine Lagarde.

ECB officials increasingly believe their efforts to tame Europe’s most significant inflation spike in decades are nearly complete.

Money markets reduced expectations of further cuts, with another quarter-point move no longer seen as certain, Bloomberg News reported.

With inflation below the ECB’s target for the first time in eight months—and only the second time since 2021—officials increasingly believe their efforts to tame Europe’s most significant inflation spike in decades are nearly complete.

However, the biggest unknown remains President Trump’s ongoing trade war, which has shaken confidence in the U.S. and clouded global economic growth.

Business sentiment that worst-case tariff scenarios were becoming less likely helped convince the Bank of Canada to hold its key interest rate steady at 2.75% for a second consecutive meeting.

“While uncertainty remains high, there was less talk of catastrophic outcomes,” said Deputy Governor Sharon Kozicki in a speech following the decision. “Firms believed that their worst-case tariff scenarios were much less likely to materialize than they reported earlier this year.”