With inflation subsiding, the European Central Bank is cutting its benchmark interest rate to prop up tepid growth with lower borrowing costs for companies and home buyers.

The reduction, to 3.5 percent from 3.75 percent, comes as inflation has slowed and the bank faces pressure to bolster the region’s flagging economy.

The European Central Bank Thursday cut three key interest rates by a quarter point, citing inflation dynamics as it loosened monetary policy restriction.