ECB Cuts Interest Rates by 25 bps in an Attempt to Send Inflation to 2%.

ECB Cuts Interest Rates by 25 bps in an Attempt to Send Inflation to 2%.

London, 06 June 2024

As anticipated, the European Central Bank (ECB) reduced the three main interest rates by 25 basis points in June, ending a nine-month period of steady rates following an increase in inflation of more than 2.5 percentage points since September 2023.

The rate for the deposit facility was reduced to 3.75%, the rate for the major refinancing operations to 4.25%, and the rate for marginal lending to 4.5%. Domestic pricing pressures are still high, meanwhile, suggesting that inflationary pressures will persist. The Council wants to maintain a data-dependent approach while keeping policy rates sufficiently tight in order to address this. The most recent staff predictions from the Eurosystem for headline and core inflation for 2024 and 2025 have been updated.

Employees now project headline inflation to average 2.5% in 2024, 2.2% in 2025, and 1.9% in 2026. The staff projects an average inflation rate of 2.8% in 2024, 2.2% in 2025, and 2.0% in 2026, excluding energy and food. It is anticipated that economic growth will accelerate to 1.4% in 2025, 0.9% in 2024, and 1.6% in 2026.

Stats

The interest rate benchmark The most recent figure for the Euro Area was 4.25 percent. From 1998 to 2024, the interest rate in the Euro Area averaged 1.82 percent; it peaked at 4.75 percent in October 2000 and fell to a record-low of 0 percent in March 2016. Actual numbers, historical data, forecasts, charts, statistics, economic calendars, and news are all provided for the Euro Area Interest Rate on this page. The most recent update to the Euro Area Interest Rate statistics, historical chart, projections, and release timetable was made in June 2024.

Forecast

The interest rate benchmark The most recent figure for the Euro Area was 4.25 percent. Analysts and Trading Economics global macro models predict that by the end of this quarter, the interest rate in the Euro Area will be 4.25 percent. Our econometric models predict that the long-term trend of the Euro Area Interest Rate will be approximately 2.50 percent in 2025 and 2.25 percent in 2026.

(Source: Trading Economics)