European Central Bank expected to cut interest rates for first time in five years

The decision by ratesetters at the ECB in Frankfurt will be made amid a slight rise in inflation in May, which could prove to be a blip. Photograph: Michael Probst/AP

The European Central Bank is expected to cut interest rates for the first time in almost five years at its meeting on Thursday after a survey of private sector businesses showed activity expanded at the fastest pace in a year while inflation cooled.

The latest HCOB purchasing managers’ index (PMI) data, compiled by S&P Global, showed private sector output expanded in most economies covered by the euro currency after growth in Germany, Italy and Spain was only marginally offset by a downturn in France.