European Central Bank cuts key interest rate to 3.5%

The European Central Bank on Thursday cut its key interest rate by 0.25 percentage points, down to 3.5%.

The deposit facility rate is the interest that banks receive for parking funds at the ECB.

Changing interest rates can help control inflation. The ECB last cut its rates in June, and then kept them steady in July.

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%.

The ECB made its decision based on an "updated assessment of the inflation outlook" and warned that "inflation is expected to rise again in the latter part of this year."

Cutting interest rates is also one way to try and stimulate economic growth by making it cheaper for individuals and businesses to borrow money.

Several European countries including Germany are struggling to achieve any growth this year.

"Financing conditions remain restrictive, and economic activity is still subdued, reflecting weak private consumption and investment," the bank said.