The Frankfurt-based European Central Bank has announced its first rate cut since September 2019. The decision comes as inflation in the eurozone has slowed in recent months

The current benchmark, the rate on deposits, which was at its highest level last September at 4%, will be cut to 3.75%, offering some respite to indebted businesses and households.

Since peaking at 10.6% in October 2022, inflation in the eurozone has fallen more than fourfold, as energy prices rose due to the war in Ukraine and disruptions to global supply chains caused by the Covid-19 pandemic.

Although inflation rose slightly in May, to 2.6% after 2.4% in April and March, this recovery does not call into question the downward trend in the overall index, experts note. Despite this, the ECB is still striving to achieve its target of 2% inflation by 2025.