The European Central Bank (ECB) lowered its key interest rates by 25 basis points to 2.5%, marking the sixth consecutive rate cut since June, in an effort to bolster the Eurozone economy amid rising uncertainties. The decision aligns with market expectations and comes against a backdrop of trade tensions and geopolitical shifts. In its latest projections, the ECB staff expects the Eurozone economy to grow by 0.9% in 2025 and 1.2% in 2026, revising down previous forecasts of 1.1% and 1.4% respectively. Inflation is projected to average 2.3% in 2025, with expectations to reach the 2% target very early in 2026. Core inflation, excluding food and energy, is forecasted at 2.0% in 2026. ECB President Christine Lagarde stated that the disinflation process is well on track, but the economy faces continued challenges, including uncertainties arising from trade tensions and increased defense spending plans. Lagarde emphasized that the ECB will adopt a data-dependent and meeting-by-meeting approach to future monetary policy decisions. The ECB indicated that its monetary policy is 'becoming meaningfully less restrictive,' suggesting that the current phase of rate cuts may be nearing its end. The central bank noted that domestic inflation remains high, mainly due to wage and price adjustments following the previous inflation surge. The decision comes as European economies grapple with the potential impact of U.S. tariff threats and geopolitical tensions. The ECB highlighted that downward revisions to growth forecasts reflect lower exports and ongoing weakness in investment, partly due to high trade policy uncertainty.