ECB's Delicate Balancing Act: Cutting Rates Amidst Economic Uncertainty

The European Central Bank is poised to cut interest rates again on Thursday, marking the eighth reduction within a year, as it strives to bolster a faltering euro zone economy plagued by fluctuating U.S. economic policies and trade tensions.

With inflation aligning at the ECB's 2% target, Thursday's rate cut is expected but focus shifts to ECB President Christine Lagarde's future policy signals. Investors anticipate a pause in July, as some policymakers argue for a break to reassess economic uncertainties domestically and internationally.

Economists highlight the need for caution, citing potential short-term inflation dips and medium-term pressure increases due to fiscal changes and trade barriers. Despite near-term sluggish growth predictions, rising European defense spending and demographic shifts may drive inflation, necessitating future ECB rate hikes.

(With inputs from agencies.)