Citing a sustained fall in inflation, the ECB said its deposit rate would be cut to 3.75% from a record high of 4%, putting it ahead of the US Federal Reserve and the Bank of England, which have yet to cut interest rates.
Citing a sustained fall in inflation, the ECB said its deposit rate would be cut to 3.75% from a record high of 4%, putting it ahead of the US Federal Reserve and the Bank of England, which have yet to cut interest rates.
This is the best summary I could come up with:
The European Central Bank has eased the pressure on borrowers across the eurozone after cutting its main interest rate for the first time in almost five years.
Financial markets eagerly anticipated the first eurozone cut since September 2019, which will also affect the ECB’s main refinancing operations rate, which fell from 4.5% to 4.25%.
City analysts had forecast the cut in borrowing costs at the ECB’s June meeting after signals that the central bank was ready to offer more support to eurozone economies after a period of economic stagnation following the Russian invasion of Ukraine.
Dean Turner, the chief eurozone economist at UBS Global Wealth Management, said the outlook for inflation, as indicated by the ECB’s latest projections, point to further interest rate reductions later this year.
But with the disinflationary process firmly under way, the ECB, along with other central banks, should feel confident enough to ease policy, most likely at a pace of one cut per quarter.”
Mark Wall, the chief European economist at Deutsche Bank, said the higher than previously forecast inflation numbers would make ECB policymakers more circumspect about futures cuts.
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