European Central Bank cuts interest rates for the first time since 2019

The European Central Bank on Thursday confirmed a widely-anticipated reduction in interest rates at its meeting in Frankfurt, despite lingering inflationary pressures in the 20-nation euro zone.

It takes the central bank’s key rate to 3.75%, down from a record 4% where it has been since September 2023.

″Based on an updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission, it is now appropriate to moderate the degree of monetary policy restriction after nine months of holding rates steady,” the ECB Governing Council said in a statement.

Money markets had fully priced in the 25 basis point move lower at the June gathering. It is the first cut since September 2019, when the deposit facility was in negative territory.