The European Central Bank (ECB) cut interest rates for the first time since 2019, reducing the key rate from 4% to 3.75% amid persistent inflation in the eurozone. This decision, influenced by updated inflation forecasts and the strength of monetary policy transmission, follows nine months of steady rates. The ECB also raised its inflation outlook for 2024 to 2.5% and for 2025 to 2.2%. Markets had anticipated this 25 basis point cut and predict one more reduction this year, though some economists expect two additional cuts.