The European Central Bank on Thursday confirmed a widely-anticipated reduction in interest rates at its meeting in Frankfurt, despite lingering inflationary pressures in the 20-nation euro zone.
It takes the central bank's key rate to 3.75%, down from a record 4% where it has been since September 2023.
″Based on an updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission, it is now appropriate to moderate the degree of monetary policy restriction after nine months of holding rates steady," the ECB Governing Council said in a statement.
Money markets had fully priced in the 25 basis point move lower at the June gathering. It is the first cut since September 2019, when the deposit facility was in negative territory.
Markets have only fully priced one further reduction this year, but economists polled by Reuters last week forecast two more cuts taking place over the period.
Investors will now be monitoring the tone struck by ECB President Christine Lagarde in her press conference at 2:45 p.m. Frankfurt time.
Especially important will be the fresh quarterly projections on economic growth and inflation set to be released by ECB staff.
Source : CNBC
