ECB Cuts Interest Rates as the Economy Weakens

The European Central Bank lowered interest rates on Thursday, the fourth cut this year amid growing concerns that the region’s economic outlook is darkening.

Policymakers reduced the bank’s deposit rate by a quarter point, to 3 percent, in a move widely expected by investors. The bank, which sets rates for the 20 countries that use the euro, has been lowering rates since June as inflation slowed toward its target of 2 percent.

In November, inflation averaged 2.3 percent across the region, slightly higher than in previous months as energy prices rose. The bank forecast inflation will average 2.1 percent next year.

There is “not yet the victory against inflation, not yet mission accomplished,” Christine Lagarde, the president of the central bank, said on Thursday at a news conference in Frankfurt. But at their final policy meeting for the year, officials acknowledged that “inflation was really on track” to meet their 2 percent target, she added.

Policymakers did discuss whether a larger half-point cut was warranted, but they all ultimately agreed to the quarter-point reduction, Ms. Lagarde said.

Substantial progress has been made reining in inflation in recent years after it peaked above 10 percent in late 2022, but other risks are accumulating. Europe faces the prospect of higher tariffs on its goods exported to the United States imposed during the second term of President-elect Donald J. Trump. And political turmoil in Germany and France, the bloc’s two largest economies, is adding to the uncertainty.