The European Central Bank cut interest rates as expected on Thursday and kept the door ajar to more, even as a looming trade war with the U.S. and plans to boost military spending drive Europe's biggest economic policy upheaval in decades.

The bank cuts rates from 2.75% to 2.5% but faces pressures from threatened US tariffs and plans to boost military funding.

FRANKFURT — The European Central Bank cut its key deposit rate by 25 basis points to 2.50 percent, but its boss, Christine Lagarde, said the Bank may pause cuts as growing uncertainty clouds the economic outlook.