European Central Bank Cuts Interest Rates as Economic Growth Stagnates

The European Central Bank cut interest rates on Thursday, for the fifth consecutive time, amid slowing growth in the region’s economy.

Policymakers lowered the bank’s key rate a quarter point to 2.75 percent as inflation remained relatively close to their 2 percent target. The moves comes a day after the U.S. Federal Reserve held rates steady, as the economic outlook of the United States and Europe diverge.

“The disinflation process is well on track,” Christine Lagarde, the president of the European Central Bank, said on Thursday, adding that she expected inflation to return to the target during the course of this year.

Annual inflation in the eurozone was 2.4 percent in December, slightly higher than the previous month as energy prices rose.

The central bank’s policymakers have differing perspectives about the outlook for inflation. Some emphasize signs of persistent inflationary pressures, such as price growth in the services sector, which has held stubbornly around 4 percent. Others, including the bank’s chief economist, Philip R. Lane, have said that if borrowing costs stay too high for too long then inflation could fall too low. But the decision on Thursday to cut rates was unanimous, Ms. Lagarde said.

She added that the eurozone’s economy was expected to remain weak in the near term. Earlier in the day, data showed the economy stagnated in the fourth quarter of last year, faltering after it expanded 0.4 percent in the previous quarter.