The European Central Bank (ECB) cut its benchmark interest rate by a quarter point to 2% for the eighth time, aiming to stimulate economic growth in the euro area. This decision comes amidst concerns over U.S. President Donald Trump's escalating trade war and new tariffs, which threaten to dampen exports, investment, and consumption in Europe.
ECB cuts benchmark interest rate for 8th time
Donald TrumpEuropeInternational tradeFrankfurtFinancial servicesEuropean Central BankBusiness ownershipTariffs and global tradeEurocopa 2024BusinessPoliticsChristine LagardeEuropean Union
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TL;DR: Key points with love ❤️The European Central Bank (ECB) cut its benchmark interest rate by a quarter point to 2% for the eighth time, aiming to stimulate economic growth in the euro area. This decision comes amidst concerns over U.S. President Donald Trump's escalating trade war and new tariffs, which threaten to dampen exports, investment, and consumption in Europe.
Trending- 1 2021-23: ECB raised rates to suppress inflation triggered by Russia's invasion of Ukraine and pandemic rebound.
- 2 2023-24: Benchmark rate peaked at 4%.
- 3 April 2: Donald Trump announced a slew of new tariffs.
- 4 Thursday (June 5, 2025): ECB cut benchmark interest rate to 2%.
- 5 Currently: Trump threatened to impose a 50% tariff on European goods.
- 6 July 14: Deadline for negotiators to reach agreement on trade issues.
- 7 October 31, 2027: Christine Lagarde's eight-year term ends.
- More affordable borrowing for businesses and consumers
- Potential stimulus for euro area growth
- Uncertainty about future rate path depending on trade tensions
- Increased government spending on defense and infrastructure
What: The European Central Bank (ECB) cut its benchmark interest rate for the eighth time by a quarter of a point, bringing it to 2%.
When: Thursday (June 5, 2025); Trump announced new tariffs April 2; 2023-24 (peak rate); 2021-23 (inflation outbreak); July 14 (deadline for trade talks).
Where: Frankfurt, Germany (ECB headquarters); Euro area; United States; Ukraine.
Why: To support businesses and consumers with more affordable borrowing and stimulate economic growth, as U.S. President Donald Trump's trade war and new tariffs threaten to slow already tepid growth in the euro area. Also, inflation is now down to 1.9%, below the bank's 2% target, giving room for cuts.
How: The ECB's rate-setting council voted to cut the benchmark interest rate by 0.25 percentage points.