The European Central Bank (ECB) has cut interest rates for the third time this year.

The decision piles pressure on the Bank of England to move faster in the UK. The Frankfurt-based institution lowered its benchmark borrowing rate to 3.25 per cent. 

The ECB said inflation was increasingly under control – having fallen sharply following a painful spike in the wake of Covid lockdowns and the invasion of Ukraine – while the outlook for the moribund eurozone economy was worsening. 

The German economy – the biggest in the eurozone – is in crisis as its once-mighty industrial heartlands suffer in the face of higher energy bills and subdued demand around the world. 

The ECB is expected to cut rates further in the coming months. 

The Bank of England approved its first rate cut in the UK for four years in August – reducing them from 5.25 per cent to 5 per cent – but has since held firm.

But with inflation now below the 2 per cent target at 1.7 per cent, it is expected to cut rates again in November and December, taking them to 4.5 per cent by Christmas.

Analysts predict a string of further reductions next year.