The ECB cuts rates for the eighth time in a year

 The European Central Bank on Thursday offered no surprises as it cut interest rates for the eighth time in a year - further widening the differential between official U.S. and eurozone policy rates, a gulf that has prompted President Donald Trump to lash out repeatedly at Federal Reserve Chair Jerome Powell.

But ECB President Christine Lagarde's remarks at a news conference following the decision was taken by economists and traders as a sign that the easing cycle may be due for at least a pause.

"We are in a good position on the basis of the trade path" and Thursday's quarter-point rate cut, Lagarde said when asked if the end of the easing cycle was near, while emphasizing that decisions would be taken on a meeting-by-meeting basis dependent on the economic data.

The remark "suggests that policy makers will only adjust policy rates further in response to an external shock or developments, said Bas van Geffen, senior macro strategist at Rabobank, in a note.

Thursday's cut was the ECB's eighth since it first began easing policy in June of last year. The cuts have brought the deposit rate, which is its key policy rate, down to 2% from 4% a year ago. The Fed, meanwhile, cut interest rates by a total of 1 percentage point last year and has been on hold since December, with the fed funds rate at 4.25-4.5%.

Trump as recently as Wednesday slammed Powell in a Truth Social post after a weaker-than-expected reading on private-sector payroll growth and comparing the Fed's policy stance unfavorably with the ECB's aggressive cutting.

Lagarde in April offered Powell some moral support amid a barrage of criticism of the Fed chief by Trump, saying, "I have a lot of respect for my esteemed colleague and friend Jay Powell."

Economists have highlighted key differences between the eurozone and U.S. economies, which have given the ECB more leeway to aggressively cut interest rates. Eurozone growth has been much weaker than in the U.S., with Europe suffering more from the Russia-Ukraine war and a slowdown in China. Inflation in the eurozone has fallen faster, with a preliminary benchmark reading falling to 1.9% in April, just below the central bank's 2% target. A strong euro (EURUSD) has also served to keep inflation in check.

https://www.morningstar.com/news/marketwatch/20250605270/european-central-bank-cuts-rates-for-8th-time-but-may-not-be-in-a-hurry-to-deliver-another