European markets closed higher on Thursday, after the European Central Bank (ECB) cut interest rates for the third time this year. The ECB lowered its key deposit rate by 25 basis points to 3.25%, as part of its ongoing effort to control inflation, which has eased significantly in recent months. This cut, widely anticipated by investors, aims to support the slowing eurozone economy.
The pan-European Stoxx 600 index rose by 0.83%, while other major indexes, such as Germany's DAX and France's CAC 40, also posted gains of 0.77% and 1.22%, respectively. The UK's FTSE 100 gained 0.67%. Investors responded positively to the ECB’s decision, which reflects its confidence that inflation is stabilising but also signals caution about further economic challenges.
While ECB President Christine Lagarde emphasised that inflation is not yet fully under control, she noted that the decision was unanimous among policymakers. However, she refrained from committing to additional rate cuts in the near future, stressing the importance of remaining data-driven. The rate cut also coincided with positive corporate earnings reports, adding further momentum to the markets.
The decision highlights the ECB's balancing act of managing inflation while supporting the region's economic growth.
