The European Central Bank cut interest rates for the sixth time in nine months on Thursday, sticking to its easing plan in the face of economic upheaval from an unfolding trade war and new plans to boost Europe's military spending.

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.

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.

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.

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%.

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 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

For four years, the ECB has been trying to slow the economy down, raising its key deposit rate to a record 4 percent to choke off inflation, before gradually lifting its foot off the brake since June. Next week’s expected rate cut will be the sixth in the current sequence, and will bring the deposit rate down to 2.5 percent.