The ECB cut interest rates for the eighth time in the past year and signalled at least a pause in policy easing next month since inflation was now safely back at its 2% target after three years of overshooting.

Eurozone inflation fell to 1.9% in May, below forecasts, boosting expectations of an ECB rate cut on Thursday. Core inflation also eased to 2.4%. The euro slipped and bond yields fell as markets priced in a 25bp rate cut to 2.

The European Central Bank cut its key interest rate to the lowest level since early 2023, a response to slowing inflation and threats to growth from President Trump’s trade war. The move deepens a divergence with the U.