The Governing Council of the European Central Bank (ECB) today made a new cut in interest rates. Under the decision, the key interest rate is reduced by 25 basis points to 2.50% from 2.75% previously.

This is the fifth consecutive rate cut by the ECB and the sixth overall since 2024 to date.

This cut is likely to be the latest that the ECB’s 26 policymakers could easily agree on. Controversy over how much further they will go on cuts – and how quickly – is already underway.

That’s because borrowing costs are now approaching levels where they may not further constrain the eurozone’s sluggish economy – prompting some to warn against excessive easing. There are other reasons for caution. US trade tariffs could damage the region’s growth prospects, while a peace deal in Ukraine is likely to improve them dramatically.

However, markets expect a further cut in the deposit rate to 2% in 2025, which is also expected by ECB board members such as Bank of Greece Governor Yannis Stournaras, French central banker François Villeroy de Gallo, and others.