The European Central Bank (ECB) cut interest rates by 25 basis points, marking its third rate reduction this year. This brings the deposit rate down to 3.25% from 3.5% and is the first time in 13 years that the ECB has implemented back-to-back rate cuts.

This move comes amid a weakening growth outlook for the eurozone, particularly as Germany enters its first two-year recession in two decades. Inflation has also dropped, with consumer prices in the euro area rising by just 1.7% in September, down from 2.2% in August. This marks the first time since 2021 that inflation has fallen below the ECB’s 2% target, considered optimal for price stability.

Despite this decline, the ECB warned that inflation could rise in the short term before declining again next year. The euro also weakened, reaching its lowest level in two and a half months.