European Central Bank Cuts Rate 25bps to 3.25%
The dovish European Central Bank (ECB) has further cut the key rate by an additional 25 basis points (bps) to 3.25%, according to a latest monetary decision announced at its meeting in Slovenia. The deposit interest rate is now at 3.25%, down from 3.5%. ECB has been hacking rate amidst efforts to see Europe’s economic growth consolidating.
The decision to cut rates only five weeks after the last cut and with only very few pieces of economic data since then, suggests that the ECB must have become much more concerned about the Eurozone’s growth outlook and the risk of inflation undershooting the target, ING said in a note.
Analysts also noted that the official language in the ECB’s decision was almost unchanged from the September meeting. Investors will hear more details from ECB President Christine Lagarde at the press conference starting at 8.45 p.m. ET Thursday, but the earlier decision to step up the pace of rate cuts signals a change in how the central bank is looking at the eurozone economy, stated ING.
Back in September, the ECB expected a short-lived softening of the economy in the second half of this year and a subsequent return to potential growth from early 2025 onwards. At the same time, inflation was expected to come down to 2.0% by the end of 2025.
Whether the few data points released since then have altered the picture or other factors are at play remains unclear, added the bank.
The fact is that the ECB looks much more concerned about the lack of growth and inflation undershooting than five weeks ago and it’s hard to see how Thursday’s rate cut cannot be seen as a signal that the ECB is now in a hurry to bring interest rates down to a more neutral level. #European Central Bank Cuts Rate 25bps to 3.25% GTBank, Zenith, FCMB Drive Intraday Loss on NGX
