The European Central Bank has lowered its benchmark deposit rate to 2.5% to encourage borrowing and stimulate economic growth in the eurozone. The ECB also revised its growth forecast for the region to 0.9% in 2025 and 1.2% in 2026, following stagnant growth recorded in late 2024. ECB President Christine Lagarde highlighted economic uncertainties, including potential trade tensions and increased defense spending, that might affect growth and inflation. Germany's plans for significant infrastructure spending serve as an example of the mixed economic currents facing Europe.
European Central Bank President Christine Lagarde stated, "an escalation in trade tensions would lower euro area growth by dampening exports and weakening the global economy."
Lagarde pointed out, "An increase in defense and infrastructure spending could also add to growth; it could also raise inflation through its effect on aggregate demand."
Lagarde stated, "the eurozone faces risks, uncertainty all over."
The ECB forecasted that eurozone growth would be slower by 0.9% in 2025 and 1.2% in 2026.
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