Dark clouds loom over the ECB headquarters in Frankfurt, Germany, June 6, 2024. (Photo: Reuters/Wolfgang Rattay)

Over the past year, the ECB has reduced borrowing costs by a total of 2 percentage points in response to the euro zone’s struggling economy and global trade tensions. The interest rate on its main refinancing operations will be lowered to 2.15%, and on its marginal lending facility, to 2.4%.

Inflation across the euro zone has come under control since the surge triggered by the COVID-19 pandemic, with the rate easing to 1.9% in May 2025 – below the ECB’s 2% target. That figure is seen as a “neutral” rate, neither stimulating nor restraining economic growth.

With inflation under control, the ECB has shifted its priority from curbing borrowing costs to reviving economic activity across the 20-member bloc. The ECB kept its growth forecast for 2025 unchanged at 0.9%.