Christine Lagarde said the central bank is switching “to a more evolutionary approach” as it will take longer for inflation to cool towards its 2pc target.

The news that the European Central Bank has cut rates for the sixth time in the past 12 months is a positive development for Irish consumers and businesses.

FRANKFURT — The European Central Bank cut its key deposit rate by 25 basis points to 2.50 percent, but signalled that it may soon have to take a more cautious approach to easing policy as the eurozone economy heads into the great unknown.

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.

Although the ECB would not pre-commit to future rate cuts, the fact that Christine Lagarde did not push back on lower rate cut expectations is a sign that the ECB is comfortable with a neutral rate around 2%.

The European Central Bank looks primed to cut its key interest rate next week, after French inflation fell, and price increases held steady in Germany, Italy and Spain.

The euro edged higher after the European Central Bank cut interest rates but signaled it could move cautiously with further easing. The euro rose 0.3% to $1.082. It had been flat

Inflation in Europe eased to 2.4% in February, supporting the case for another interest rate cut from the European Central Bank but leaving open how far the central bank will go in lowering borrowing costs.

The monetary chief told reporters in Frankfurt on Thursday that a huge increase military spending is likely to boost the economy