The European Central Bank cut its economic growth expectations for the euro zone once more on Thursday and raised its projection for inflation this year, even as it predicted price growth back at target in 2026.

The ECB cut interest rates by 25 basis points and updated the language in its decision to say monetary policy was becoming “meaningfully less restrictive.”

The European Central Bank's Governing Council said Thursday it had decided to lower three key interest rates by a quarter point. The bank cited the "disinflation process" in making the decision.

Euro zone inflation dipped a bit less than expected last month but its most closely watched component also dropped, sealing the case for another ECB interest rate cut on Thursday and solidifying bets for further policy easing in the coming months.

The European Central Bank is cutting interest rates by a quarter percentage point, lowering credit costs for consumers and businesses to support an economy that is struggling to show solid growth

European Central Bank policymaker Mario Centeno said on Friday he expects inflation to fall to its medium-term target of 2% in a sustainable manner since euro zone inflation is "almost out of the woods".

European markets are set to open higher on Thursday as investors await the European Central Bank’s (ECB) latest monetary policy decision. Economists are predicting the central bank will lower its key interest rate by 25 basis points to 2.