The ECB announces interest rate cuts

The Governing Council of the European Central Bank (ECB) decided on Thursday to cut interest rates by 25 basis points, bringing the reference rate for its refinancing operations from 4.5% at 4.25%. The deposit interest rate drops to 3.75% and the interest on the credit facility to 4.50%.

In this way, the issuing institution reduces the interest rate after it has remained unchanged for four consecutive meetings. The ECB hit the brakes at its October 2023 meeting after ten consecutive increases in the monetary price, taking it to the highest level in more than two decades.

The ECB has argued that, after assessing the inflation outlook, the underlying dynamics and the intensity of the transmission of its decisions to the economy, it is ‘appropriate to now moderate the degree of monetary policy restrictions after nine months into the period when interest rates have been decreased. remained unchanged”.

Moreover, he recalled that inflation has fallen by more than 2.5 points since their meeting in September and that the outlook has “improved significantly”, while underlying inflation has moderated and monetary policy has remained restrictive.

It was as expected and the move, although long-awaited by mortgage holders and other debtors, could remain a simple gesture given the power that inflation and wages still exhibit.

“Domestic inflationary pressures remain intense” due to high wage growth, and inflation is likely to remain above target well into next year, he said.

In that sense, the organization has done that revised upwards are latest inflation forecasts for March, up two-tenths for 2024 and 2025, to 2.5% and 2.2% respectively. has been postponed again until 2026, by 1.9%achieving the objective of price stability.