The ECB makes its eighth rate cut in a year, leaving the price of money at 2%.

The European Central Bank ( ECB ) has followed expectations and lowered its official interest rates again by 0.25 percentage points. This is the eighth non-consecutive cut in a year, and the seventh in a row, leaving the price of money at 2% in this downward cycle that could be coming to an end. A level like this has not been seen since November 2022.

Better inflation control is what allows the monetary institution to continue lowering interest rates and thus try to revive the European economy, which has been showing a sluggishness for several quarters, which is worrying analysts and investors at times.

With this, the ECB also widens the interest rate gap with its American counterpart, the Federal Reserve, which is more of a wait-and-see attitude following Donald Trump's policies with tariffs and his fiscal plan. This, in principle, doesn't seem to be a concern in Frankfurt, although it is being monitored by European economic institutions and institutes for the risk of imported inflation.

From now on, the discussion will focus on when to stop the rate cuts. Following this latest decision, which the market had already priced in, there are growing calls within the organization chaired by Christine Lagarde to halt the cuts, and analysts are suggesting a pause until after the summer.

"Inflation is currently around the Governing Council's medium-term objective of 2%. The latest Eurosystem staff projections, based on the reference scenario, project headline inflation to average 2.0% in 2025, 1.6% in 2026, and 2.0% in 2027. The downward revisions, compared with the March projections, of 0.3 percentage points for 2025 and 2026 mainly reflect lower assumptions regarding energy prices and an appreciation of the euro," the institution said in its statement, highlighting that inflation is within expected levels.

Economic growth, the other factor considered by the ECB, remains weak, although it remains positive despite tariff threats from the United States. "Experts estimate that real GDP growth will average 0.9% in 2025, 1.1% in 2026, and 1.3% in 2027. Maintaining the growth projection for 2025 reflects a stronger-than-expected first quarter along with a weaker outlook for the remainder of the year. Although uncertainty over trade policies is expected to weigh on business investment and exports, particularly in the short term, increased public investment in defense and infrastructure will gradually support growth over the medium term," the ECB indicated.

Thus, the monetary organization projects that "if trade tensions escalate further in the coming months, growth and inflation would be lower than expected in the baseline projection scenario," while if they were to ease, the effect would be the opposite for each variable.