The European Central Bank (ECB) decreased its benchmark interest rate by 25 basis points to 2% which represents its eighth reduction in the ongoing easing cycle. The central bank made this decision because inflation rates decreased while trade tensions continue to rise. Investors seek direction from ECB President Christine Lagarde regarding upcoming policy actions while some analysts forecast that interest rate reductions will stop during summer.
European markets experienced improved sentiment after Germany received approval for its tax relief package and industrial orders in Germany showed an unexpected increase during April. The euro and regional government bonds showed no change in value because traders need additional information from the ECB before making decisions.
