The European Central Bank (ECB) has cut interest rates for the sixth time in nine months as it seeks to bolster eurozone economic growth.
The bank stuck to its plan to lower rates in the face of economic challenges, including threats of US tariffs and plans to boost European military spending.
With inflation getting closer to its 2% target, the ECB lowered its main interest rate from 2.75% to 2.5%.
It said the interest rate cuts were “making new borrowing less expensive for firms and households”.
The ECB faces a number of upcoming challenges as it tries to get inflation to its 2% target.
The eurozone economy may suffer if the Trump administration goes ahead with plans to impose “reciprocal tariffs” on every country that taxes US imports.
And within the eurozone, Germany’s move this week to increase military and infrastructure spending could stoke inflation.
Political parties in talks to form a new government plan to pay for this by loosening Germany’s fiscal rules, raising the prospect of a big increase in debt.
In response, longer term German bonds saw their biggest sell-off in years on Wednesday, and the euro jumped to its highest level in almost four months, while stocks also rebounded.
On Thursday, British government borrowing costs also increased after the German sell-off.
