ECB set for key decision on cutting interest rates as inflation slows

The European Central Bank (ECB) is set to decide on cutting interest rates on Thursday as inflation slows across the eurozone.

The ECB decision is due to be announced at 2:15 pm (1215 GMT), with financial markets expecting a rate cut.

The Frankfurt-based institution's key interest rate currently stands at 3.75% and is seen as likely to fall by 0.25 percentage points.

The main refinancing rate, the rate at which banks borrow money from the ECB, is 4.25% and could also drop significantly.

Inflation in the eurozone fell to 2.2% year-on-year in August, the lowest figure since 2021, but central banks have warned that core inflation - excluding more volatile indicators such as energy and food prices - remains at 2.8%.

Cutting interest rates could kickstart the European economy, with several countries including Germany struggling to achieve growth.

However, after years of increasing prices, the ECB is wary of causing a further round of inflation by lowering rates too fast.

The ECB is also due to present new forecasts on inflation and economic growth, which could provide further indications on future monetary policy.