The European Central Bank's rate-setting council on Thursday cut the institution's benchmark rate a quarter-point to 2% — and hinted that a trend of succession reductions over the past year may be coming to an end.

The reduction comes with growth slow to pick up and further gloom over US President Donald Trump's most recent threat to raise tariffs on goods from the European Union to 50%.

What did the ECB say about the eurozone outlook?

As it announced the rate decision, the ECB was measured in its tone about the US levies and possible retaliation. 

It said the "uncertainty surrounding trade policies is expected to weigh on business investment and exports," while adding that "rising government investment in defence and infrastructure will increasingly support growth over the medium term."

"Higher real incomes and a robust labour market will allow households to spend more. Together with more favourable financing conditions, this should make the economy more resilient to global shocks," it added.

Monetary policymakers also lowered their inflation forecast for 2025, with consumer price increases now expected to hit the central bank's 2% target this year. Having ramped up interest rates to tame spiraling inflation, policymakers are now hoping that price rises have been brought under control. 

Meanwhile, the bank left its growth forecast for 2025 unchanged at 0.9%.

Might rate cuts be coming to an end?

European Central Bank President Christine Lagarde said policymakers were in a "good place" to manage economic uncertainty after the latest cut.

"I think we are getting to the end of a monetary policy cycle," Lagarde said at a press conference, a year after the ECB started cutting interest rates. "After that 25-basis-point rate cut and with the right path as it is, we are in a good place."

Lagarde said policymakers were "virtually unanimous" on the rate cut, part of the bank's most aggressive rate-easing cycle since the 2008/2009 global financial crisis.

Some conservative policymakers, including ECB board member Isabel Schnabel, have pushed for a break to allow time to reassess how recent upheavals may reshape the outlook.

While Schnabel has openly called for a pause, other decision makers remained more cautious. 

The widely expected move is the seventh consecutive reduction and eighth cut since June last year, when the bank began lowering borrowing costs.

Investors have already been pricing in a pause in rate cuts for July, as the ECB faces mounting global and domestic uncertainty.

Edited by: Wesley Rahn