Core Viewpoint - The European Central Bank (ECB) has lowered its key interest rates by 25 basis points, marking the seventh rate cut since June 2024, indicating a shift in focus from controlling inflation to supporting growth amid persistent inflation and external risks [1][2]. Interest Rate Changes - As of April 23, the ECB's three key interest rates are now set at 2.25% for the deposit facility rate, 2.40% for the main refinancing rate, and 2.65% for the marginal lending rate [1]. - This decision reflects a consensus among market participants and policymakers regarding the complex economic situation [1]. Inflation and Economic Outlook - Recent data shows a decline in both overall and core inflation rates in the Eurozone, with service sector price increases easing significantly [2]. - Potential inflation indicators suggest that price trends are gradually aligning with the ECB's medium-term target of 2% [2]. - However, the overall growth outlook for the Eurozone remains challenging, with geopolitical conflicts and rising trade barriers suppressing business investment and consumer spending [2]. Economic Indicators - The S&P Global's April Purchasing Managers' Index (PMI) for the Eurozone fell to 50.1, indicating a stagnation in economic activity, primarily due to unexpected contractions in the service sector, particularly in Germany and France [3]. - The ECB's rate cut is viewed as a preemptive defensive measure aimed at stabilizing market expectations and mitigating economic downturn risks [3]. Policy Coordination and Structural Challenges - Despite the rate cut signaling a shift towards monetary easing, the ECB acknowledges existing structural constraints and calls for enhanced fiscal coordination among member states [4]. - The ECB emphasizes the need for governments to prioritize green transitions, technological innovation, and digital infrastructure development [4]. - The ECB's policy documents highlight the importance of a robust fiscal framework to bolster market confidence and complement monetary policy efforts [4].