ECB reduces interest rates / day
At the ECB Council meeting, it was decided that the deposit option would be reduced to 2%overnight. 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 2.15% and at night the loan options to 2.4%, the ECB said.
The new bets will come into effect on June 11.
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.
Inflation is currently around the Council’s 2% average -term target level. According to the young specialists, the overall inflation of macroeconomic options for estimates will be 2%on average in 2025, 1.6%in 2026 and 2%in 2027. Down adjustments by 0.3 percentage points compared to March estimates of March 2025 and 2026 mainly reflect assumptions at lower energy prices and a stronger euro course. Specialists expect inflation (without energy and food prices) in 2025 on average 2.4% and 2026 and 2027 – 1.9%, said in a statement.
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 is still rapid, but continues to slow down significantly, and the profit partially cushions its impact on inflation. The concerns that the increased uncertainty and market volatile reactions to trade tensions in April could have been reduced as a result of funding conditions could become stricter, the Council states.
Specialists also expect that real gross domestic product growth in 2025 will be 0.9%on average, 1.1%in 2026 and 1.3%in 2027. The fact that the growth in 2025 was not adjusted reflects the stronger indicators in the first quarter than expected, along with weaker prospects in the remaining months of the year. While trading policy -related uncertainty is expected to adversely affect investment in business and exports, especially in the short term, increasing government investments in infrastructure and defense in the medium term are increasingly promoting growth. Higher real income and stable labor market will allow households to spend more. Along with the more favorable financing conditions, it should increase the economy’s resilience to global shocks, according to the Council’s statement.
« The Council is committed to ensuring 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. The dynamics and the transmission power of monetary policy, « 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, as well as in January, March and April 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 1.9% in April compared to 2.2% in April, recording the lowest level since September.
In addition, annual inflation in the eurozone has fallen below the 2% target set by the ECB.
supplemented after paragraph 5
