The European Central Bank (ECB) lowered its benchmark deposit rate by 25 basis points on Thursday, marking the seventh cut since June 2024.
The decision was based on “the dynamics of underlying inflation and the strength of monetary policy transmission,” the ECB said. Most measures suggest that inflation will settle at around 2% of the ECB medium-term target on a sustained basis, the central bank said.
The ECB began cutting rates in June 2024, following a decline in inflation to 2.6% after peaking at 10.6% in October 2022. The bloc’s central bank felt it needed to ease monetary policy to support the economy, as high interest rates had dampened investment and consumer spending.
Euro Area Interest Rate, Source: TradingEconomics
ECB interest rates on the deposit facility, the main refinancing operations, and the marginal lending facility will be decreased to 2.25%, 2.40%, and 2.65%, respectively, the central bank said today.
ECB Moves to Project Eurozone From Global Uncertainty
European Union (EU) monetary officials have sought to protect the eurozone from the impact of weaker global trade, market volatility, and the uncertainty surrounding US trade policy under President Donald Trump.
S&P Global lowered its 2025 global GDP growth projections on Wednesday to 2.2% from 2.5% amid the Trump administration’s tariff war.
“The euro area economy has been building up some resilience against global shocks,” the ECB said. “But the outlook for growth has deteriorated owing to rising trade tensions. Increased uncertainty is likely to reduce confidence among households and firms.”
% change in Global GDP: S&P
Concerns about global political instability have influenced the ECB’s decision-making.
“Geopolitical tensions, such as Russia’s unjustified war against Ukraine and the tragic conflict in the Middle East, also remain a major source of uncertainty,” Christine Lagarde, ECB governor, said today. “At the same time, an increase in defence and infrastructure spending …Full story available on Benzinga.com
Simple tricks to spot AI-generated videos in your social media feed
...
Read moreDetails