The European Central Bank (ECB) cut all three key interest rates by 25 basis points (bps), according to the regulator's statement. Thus, the main interest rate has been reduced to 4.25% per annum, the interest rate on deposits - to 3.75%, and on short-term loans of the ECB - to 4.5%.
„Based on the updated assessment of the inflation forecast, the dynamics of core inflation and the effectiveness of current monetary policy, it is now advisable to ease the degree of monetary policy constraint after nine months of holding rates at a stable level&ldquo ;, the regulator said.
Since the September 2023 Governing Council meeting, inflation has fallen by more than 2.5 percentage points and the outlook for inflation has improved significantly, the ECB added. Core inflation also eased, confirming signs of easing price pressures, and inflation expectations fell across the board.
According to the regulator's estimates, headline inflation in the euro area will average 2.5% in 2024, 2.2% in 2025 and 1.9% in 2026.