Effective April 23, the interest rates on the deposit facility, the main refinancing operations and the marginal lending facility will be decreased to 2.25, 2.40 and 2.65 percent, respectively, according to a press release.

The ECB's deposit facility rate is the interest rate at which commercial banks can deposit their money at the central bank.

If the deposit rate is high, banks prefer to deposit their money with the central bank, as they earn a better return. If the rate is low or negative, banks will look for alternatives and are more likely to lend out their money instead.

The ECB announced Thursday that the disinflation process is well on track, and inflation has continued to develop as expected, with both headline and core inflation declining in March. Services inflation has also eased markedly over recent months as well.

The central bank found that most measures of underlying inflation suggest that inflation will settle at around the Governing Council's medium-term target of 2 percent on a sustained basis.

Wage growth is moderating, and profits are partially buffering the impact of still elevated wage growth on inflation.

The euro area economy has been building up some resilience against global shocks, but the outlook for growth has deteriorated owing to rising trade tensions, the ECB said Thursday.

Increased uncertainty is likely to reduce confidence among households and firms, and the adverse and volatile market response to the trade tensions is likely to have a tightening impact on financing conditions. These factors may further weigh on the economic outlook for the euro area.

The ECB's latest rate cut on Thursday marks the seventh announced in the past year.

Bank economist: Europe needs low interest rates to boost economy

Following the ECB's announcement, Bigbank chief economist Raul Eamets noted that the central bank's decision directly affects the interest rate at which major European commercial banks lend money to each other — known as the Euro Interbank Offered Rate, or Euribor.

He added that the next meeting of the ECB's Governing Council will take place in June, where interest rate changes will be discussed.

"As of today, most analysts predict that the rate cuts will continue," Eamets said. "In March, inflation in euro area countries averaged 2.2 percent, which is relatively close to the central bank's inflation target (2 percent). This March, ECB's own analysts predicted an average inflation rate of 2.2 percent for the year."

According to Eamets, these interest rate cuts are positive news for the economy as a whole.

"The overall economic situation in the EU isn't very rosy, as a rapid recovery from the recession is not expected for the major economies," he explained. "German economic growth is around 0 percent this year. Thus, it can be expected that we will see some more interest rate cuts this fall. We cannot rule out that the Euribor will reach 1.5 percent by the end of the year."

According to Bigbank's chief economist, in the medium term, they expect to see prices grow in Europe, as massive investments in both the defense industry and the broader economy to stimulate growth will eventually show up in consumer prices.

"These changes are more likely to be seen next year, and even more likely the year after," he added.

Experts believe that the Euribor will drop to around 1.6-1.7 percent in the second half of the year.

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