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ECB cuts interest rates by 25 basis points to 3%
The European Central Bank on Thursday cut interest rates for the fourth time this year, confirming expectations for a quarter-point cut.
The cut takes the ECB’s key interest rate to 3%. The deposit facility had been at 4% since September 2023, before the first cut of the current easing cycle in June 2024.
The central bank backed away from its repeated message that it needs to “keep interest rates sufficiently restrictive for as long as necessary,” which had been closely watched by traders.
“The deflationary process is on track,” the central bank said in a statement on Thursday.
Expectations of a larger 50 basis point cut have faded, even as headline inflation has held near the ECB’s 2% target, while growth indicators show continued signs of deterioration in major manufacturing economies in the eurozone, including Germany.
Instead, policymakers were expected to approve a fourth 25 basis point cut, amid concerns about the recent surge in negotiated wage growth and persistent inflation in the services sector.
