Overview

• ECB cut its deposit rate by 25 basis points to 2%, marking the eighth reduction since last year.
• Eurozone inflation eased to 1.9% in May and is projected at 1.6% for 2026, below the ECB's 2% target.
• Repeated US tariffs on EU exports have weighed on growth, strengthened the euro and lowered energy costs.
• Markets forecast one more quarter-point cut this year as officials monitor wage pressures, future trade tensions and defence spending.
• European government bond yields held gains after the decision and lower borrowing costs are expected to sharpen dealmaking competitiveness.