Finance
ECB cuts inflation, growth projections
Published by Global Banking & Finance Review®
Posted on June 5, 2025
1 min readLast updated: January 23, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on June 5, 2025
1 min readLast updated: January 23, 2026
The ECB has lowered its inflation and growth forecasts, citing global trade challenges. Inflation is expected to fall below target, prompting interest rate cuts.
FRANKFURT (Reuters) -The European Central Bank cut some of its growth and inflation projections on Thursday as the fallout from a global trade war is likely to prove a drag for the 20-nation euro zone.
Inflation is now seen falling further below the ECB's 2% target next year as lower energy costs, a stronger euro and weak economic growth all weigh on prices.
Price growth will then rebound in the following year and come back to target, the ECB predicted.
A muted outlook for both economic growth and inflation is why the ECB cut interest rates again on Thursday, lowering the deposit rate by a combined 2 percentage points since last June.
That may not be enough, however. Markets see between one and two more rate cuts this year as growth remains anaemic and there is no meaningful rebound on the horizon.
The following are the ECB's projections for inflation and economic growth. Previous projections from March are in brackets.
2025 2026 2027
GDP Growth: 0.9 (0.9%) 1.1 (1.2%) 1.3% (1.3%)
Inflation: 2.0 (2.3%) 1.6 (1.9%) 2.0% (2.0%)
(Reporting by Balazs Koranyi; Editing by Catherine Evans)
The ECB cut some of its growth and inflation projections due to the ongoing impact of a global trade war affecting the euro zone.
Inflation is now expected to fall further below the ECB's 2% target next year, influenced by lower energy costs and weak economic growth.
The ECB has lowered the deposit rate by a combined 2 percentage points since last June in response to a muted economic outlook.
The ECB projects GDP growth of 0.9% for 2025, which remains unchanged from previous estimates.
The ECB's decision to cut rates is driven by anaemic growth and the lack of a meaningful economic rebound on the horizon.
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