Kathmandu: The European Central Bank (ECB) has once again lowered interest rates, signaling confidence in the eurozone economy’s ability to withstand global uncertainties. In a widely anticipated move, the ECB reduced its key deposit rate by 0.25 percentage points, bringing it down to 2 percent—the seventh consecutive cut.

The rate cut comes amid signs that inflation in the euro area is stabilizing. With eurozone inflation dropping to 1.9 percent in May, the ECB has revised its inflation forecast downward and now expects it to hit the bank’s 2 percent target this year. The move follows a period of post-pandemic monetary tightening, as the ECB now shifts focus to easing borrowing costs across the 20 countries using the euro.

Despite ongoing global challenges such as the U.S.-led trade war, ECB President Christine Lagarde said the region's economy is showing resilience. She pointed to potential future gains from infrastructure and defense investments. “We are well-positioned to navigate the uncertainties that lie ahead,” Lagarde remarked, while hinting that the ECB may be nearing the end of its current rate-cutting cycle.

When asked if further cuts could come as soon as July, Lagarde declined to give a direct answer, emphasizing a data-driven approach. However, the ECB has kept its 2025 growth forecast steady at 0.9 percent and reaffirmed that inflation is now near the central bank’s target.

Analysts believe a pause is likely in the short term. Carsten Brzeski of ING Bank said Lagarde’s remarks signal a “summer pause” in rate reductions. He suggested that the ECB might resume cuts in September, depending on how inflation trends evolve.

The ECB’s easing stance contrasts with the U.S. Federal Reserve, which has kept interest rates unchanged amid concerns that recent tariffs imposed by President Donald Trump could reignite inflation in the U.S.

Lagarde also addressed rumors about her future, firmly denying speculation that she might leave the ECB to head the World Economic Forum. “I am fully committed to fulfilling my mission and I remain committed to completing my term,” she stated.