ECB reduces interest rates / day

At the ECB Council meeting, it was decided in Frankfurt that the rate of deposits overnight would be reduced to 2.25%. The rate of deposit option is the interest rate by which the ECB Council sets out its monetary policy position.

The rate of the main refinancing operations has been lowered to 2.4% and at night loan options to 2.65%, the ECB statement said.

The new bets will come into effect on April 23.

A statement released after the meeting states that the Council’s decision to lower the interest rate of deposits – the rate at which it determines the progress of the monetary policy position – is based on an updated assessment of inflation perspective, basic information dynamics and the transmission of monetary policy.

« The disinflation process as a whole is moving according to what is expected. Inflation has continued to develop according to specialist expectations – both overall inflation and basic inflation in March have decreased, » the Council points out.

Service prices inflation has also fallen significantly in recent months. Most basic information indicators indicate that inflation will stabilize sustainably at approximately the 2% of the 2% of the average target at the Council. The rise in wages slows down, and profit partly amortizes the impact of increased pay growth on inflation. The eurozone’s economy has slightly strengthened its resistance to global shocks, but the growth perspective has worsened as a result of exacerbation of trade tensions. Higher uncertainty is likely to reduce the confidentials of households and companies, and the financing conditions are likely to become stricter due to the negative and volatile reaction of the market to trade tensions. These factors can further adversely affect the eurozone’s economic perspective, the statement said.

« The Council is committed to sustainable inflation stabilization at its 2% medium -term target level. Especially under current extreme uncertainty, it will determine the appropriate monetary policy position in accordance with the data, deciding on each meeting. Basic information dynamics and monetary policy transmission power, « the statement said.

The Council adds that it does not take over interest rates in a particular direction before.

It has already been reported that the ECB also reduced all three interest rates at previous meetings in September, October and December last year, and in January and March this year. The rates were not changed in July last year, but before that in June, all three bets were reduced by 0.25 percentage points.

In order to fight high inflation, the ECB Council gradually raised interest rates to a record high from July 2022 to September 2023, but then remained unchanged.

According to Eurostat, annual inflation in the eurozone dropped to 2.2% compared to 2.3% in February.

Supplied from paragraph 5