The European Central Bank cut interest rates for the eighth time in a year on Thursday, acknowledging inflation was under control and turning more pessimistic about economic prospects amid risks of a trade war with the United States.

Looking further forward, the ECB is forecasting an inflation rate of just 1.6 per cent for 2026, meaning it would undershoot its medium-term inflation target of 2 per cent.

Market experts still think that the current cut may not be the last for this year. Several economists anticipate that the ECB could continue its cuts, at least one more time this year. The market is currently pricing in a 45% chance of a cut in September, which is down from a 55% chance of a rate cut earlier this week.