European Central Bank cuts rates as possible trade war looms

The European Central Bank in Frankfurt, Germany (Michael Probst/AP)

The European Central Bank (ECB) has cut interest rates by another quarter of a percentage point, lowering credit costs for consumers and businesses to support an economy that is struggling to show solid growth.

The rate decision on Thursday, which was widely expected by economists, was overshadowed by concerns over a potential trade war with the US and the impact of a surge in European defence spending, two factors that could upend expectations for growth and inflation.