ECB Slashes Interest Rates Amidst Economic Uncertainty

The European Central Bank (ECB) cut interest rates, aiming to combat slowing inflation and faltering economic growth. Despite the move, the ECB provided no clear direction for future rate changes. Investors and policymakers remain divided on the pace of future cuts, reflecting cautious optimism amidst economic challenges.

The European Central Bank cut interest rates again on Thursday as inflation slows and economic growth falters, but provided no substantial clues to its next step, even as investors bet on steady policy easing in the months ahead. The ECB lowered its deposit rate by 25 basis points to 3.50% in a widely anticipated move, following up on a similar cut in June as inflation is now within close range of its 2% target, and the domestic economy is teetering on the edge of a recession.

With the cut widely expected, investor focus has already shifted to future actions and how ECB decisions will align with the U.S. Federal Reserve's widely expected rate cut next week. However, the ECB, the central bank for the 20 countries using the euro, kept its cards close to its chest. 'We are not pre-committing to a particular rate path,' ECB President Christine Lagarde said at a press conference, emphasizing the bank's 'data-dependent,' meeting-by-meeting approach to policy.

'We are looking at a range of indicators,' she added, highlighting that September could show a low inflation figure due to statistical base effects. The euro assets remained relatively stable following the rate cut and lack of indications on future policy, signaling analysts' interpretation of the ECB's cautious stance.

(With inputs from agencies.)