ECB prepares to cut interest rates as eurozone inflation drops

In Frankfurt, Germany, inflation in the 20 euro-using countries dropped to 1.9% in May from 2.2% in April, marking a significant decline that has not been seen since September. This decrease is attributed to lower energy prices and it creates an opportunity for the European Central Bank (ECB) to consider further interest rate reductions to stimulate economic growth. The current benchmark rate stands at 2.25%, and the ECB is expected to lower this by a quarter percentage point during its upcoming meeting under President Christine Lagarde. Analysts predict that Lagarde will also signal the possibility of additional cuts in future meetings. This adjustment comes amidst rising concerns over U.S. President Donald Trump's tariff policies on imported goods, which are likely to impede Europe’s export-driven economy. Tariffs on steel, aluminum, and automobiles imposed by Trump have already raised costs, prompting the European Commission to revise its growth forecast for eurozone countries from 1.3% to 0.9% for the year. These economic dynamics highlight the delicate balancing act that the ECB faces as it aims to combat inflation while responding to external pressures affecting growth in Europe.