ECB Cuts Interest Rates Again as Eurozone Inflation Slows

The European Central Bank cut interest rates on Thursday for the third time in about four months, as inflation in the eurozone has cooled faster than expected.Policymakers who set interest rates for the 20 countries that use the euro lowered their key rate by a quarter point, to 3.25 percent.Thursday’s decision came just five weeks after a cut at the bank’s previous meeting, and on the day that a report showed the eurozone’s inflation rate slowing to 1.7 percent in September, falling below the bank’s 2 percent target for the first time in more than three years.“The disinflationary process is well on track,” policymakers said in a statement.After years of trying to force inflation down with high interest rates, central bankers around the world are walking a tightrope as they consider how quickly to cut interest rates.

Lowering rates too fast could reignite simmering inflationary pressures, but keeping rates too high for too long risks slowing the economy substantially and inflation becoming too weak.In recent weeks, policymakers have suggested that rate cuts could be more aggressive as inflation has slowed and economic growth has been lackluster.Last month, the U.S.

Federal Reserve cut rates by a half-point, paving the way for quicker or bigger rate cuts in Europe, analysts said.On Wednesday, traders increased their bets that the Bank of England would pick up the pace of its rate cuts after data showed inflation in Britain fell to 1.7 percent in September, below the bank’s 2 percent target.The European Central Bank’s back-to-back rate cut, the first since 2011, was almost ruled out a few weeks ago.

Policymakers at the bank had emphasized that they would take a cautious approach to cutting rates because of stubbornly high inflation in the services sector, which is stuck at about 4 percent.Traders had been betting that the bank would wait until December to cut interest rates again.

But at the beginning of October, Christine Lagarde, the president of...