The European Central Bank (ECB) on Thursday made another rate cut of 25 basis points and revised its inflation forecast down in its latest staff projection.
The rate on the deposit facility has been brought down to two percent, and the rates on the main refinancing operations and the marginal lending facility have been cut down to 2.15 percent and 2.4 percent, respectively.
"Most measures of underlying inflation suggest that inflation will settle at around the Governing Council's 2 percent medium-term target on a sustained basis," said the ECB in a statement.
According to its staff projections in June, the ECB sees the inflation in the euro area to be two percent in 2025, 1.6 percent in 2026, and two percent in 2027. The projections for 2025 and 2026 have been revised down by 0.3 percentage points compared with the March forecast.
It is worth noting that the inflation would undershoot the ECB target in 2026 should the projections materialize.
Against the backdrop of decreasing inflation, the rate cut on Thursday was in line with expectations of the market.
The ECB slightly adjusted its growth projections for the euro area, now expecting real gross domestic product to expand by 0.9 percent in 2025, 1.1 percent in 2026, and 1.3 percent in 2027. The 2026 forecast was revised down from a previous estimate of 1.2 percent, reflecting a more cautious outlook amid persistent economic headwinds.
The central bank warns that the high uncertainty stemming from the trade tensions brought about by the U.S. trade policies will subject its inflation and growth projections to volatility.
Both inflation and growth will be lower than the baseline projections if trade tensions escalate further, said the ECB statement, citing a scenario analysis by the ECB staff.
Looking ahead, the ECB once again excluded any particular rate path, saying that its monetary policies in the future will be decided meeting by meeting.
Since June 2024, the ECB has made eight rate cuts, totaling a two percentage point reduction of the key interest rates.
ECB lowers interest rates by 25 bp as inflation forecast revised down
China's Minister of Commerce Wang Wentao outlined the key priorities of the 32nd Asia-Pacific Economic Cooperation (APEC) Ministers Responsible for Trade Meeting, which opened on Friday in Suzhou, East China's Jiangsu province.
In an interview with CGTN ahead of the two-day meeting, Wang said free trade, digital cooperation and green economy are high on the agenda of the meeting.
"The key areas include advancing regional economic integration and the Free Trade Area of the Asia-Pacific, supporting the World Trade Organization (WTO) in strengthening digital cooperation and developing green economy. At present, the international situation is marked by intertwined turbulence and chaos, with intensified geopolitical instability. The rise of unilateralism and protectionism poses serious challenges to the international economic and trade order, disrupting global and Asia-Pacific development. Against this backdrop, all parties have higher expectations for this trade ministers' meeting, hoping that it can build consensus and deliver outcomes," Wang said.
This year marks China's third time hosting the APEC meetings and the 35th anniversary of its membership.
By 2025, China had become the largest trading partner of 13 APEC economies. Trade between China and APEC economies reached 3.7 trillion U.S. dollars, accounting for 57.8 percent of China's total foreign trade.
China has signed 24 free trade agreements or economic and trade arrangements with 31 countries and regions, including 15 APEC economies. In recent years, China has also completed upgrades of free trade agreements with APEC economies such as Singapore and Peru.
The minister said that China has always been a firm supporter and an important contributor to APEC.
"We have actively shared our vast market and development opportunities with all parties. China's door to the world will only open wider and wider. Facing the common challenges, China will continue to fulfill its responsibilities as a major country, further deepen reform, expand high-standard opening-up, and continue to provide new opportunities for the Asia-Pacific region and the world with its new achievements in Chinese modernization," the minister said.
China's Commerce Minister outlines priorities for 32nd APEC trade ministers' meeting
