Goldman Sachs Group Inc. expects a pick up in Germany’s economy on the back of its plan to increase defense spending will spillover to neighboring countries and spur others in the euro area to raise military outlays too.

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.

Germany's struggling housing market will regain some lost ground this year, helped by more European Central Bank interest rate cuts, although there is a sizable risk of price growth undershooting forecasts,

Germany's plans to drastically increase government spending will be a focus at President Christine Lagarde's press conference.

The European Central Bank on Thursday cut interest rates by a quarter-point, responding to signs of deteriorating activity and weakening inflation despite bond-market turmoil over plans for a splurge of spending.

European Central Bank policymakers see a growing chance of a pause in their easing cycle at their next meeting before rates come down again, once they have greater clarity about trade and fiscal policy,

The European Central Bank cut interest rates again on Thursday but warned of "phenomenal uncertainty" including the risk that trade wars and more defence spending could fuel inflation, raising the prospect of a pause in its policy easing next month.

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.

The rate cut comes as the ECB seeks to alleviate pressure on consumers and businesses amid sluggish economic growth in Europe, and the threat of trade tensions with the US.