European Central Bank lowers rates

Source: Dukascopy Bank SA
The European Central Bank (ECB) has decided to cut its three key interest rates by 25 basis points. The deposit facility rate is now 2.25%, the main refinancing rate is 2.40%, and the marginal lending rate is 2.65%. These changes, effective from April 23, 2025, are part of the ECB's ongoing efforts to manage inflation and support the euro area's economic stability.

The decision comes after an updated assessment of the inflation outlook. Inflation has been decreasing as expected, with both headline and core inflation falling in March, along with a significant easing in services inflation. The disinflation process is progressing well, and the ECB believes inflation will eventually stabilize at its 2% target in the medium term. Wage growth is slowing, which is helping moderate inflationary pressures.



However, the ECB also highlighted concerns about global trade tensions and their impact on economic growth. Rising uncertainty could reduce confidence among households and businesses, affecting overall economic performance. These factors are likely to tighten financing conditions, further weighing on the euro area's growth outlook.

Despite these challenges, the ECB remains committed to ensuring that inflation stabilizes at its 2% target. The Governing Council will continue to take a data-dependent approach to monetary policy, adjusting rates based on the latest economic and financial information. The ECB is not committing to any fixed path for interest rates, allowing flexibility in responding to future developments.
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