The European Central Bank (ECB) has announced a 25 basis point cut to its key interest rates, citing progress in disinflation and economic resilience. ECB President Christine Lagarde emphasized that the decision was based on updated inflation forecasts, which indicate that headline and core inflation are declining as expected.
Key Highlights from the ECB Policy Meeting
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Rate Cut Details – The ECB lowered the deposit facility rate, reinforcing its commitment to stabilizing inflation at 2%.
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Inflation Outlook – The ECB projects 2026 inflation at 1.6%, with 2027 inflation expected to settle at 2%.
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Economic Uncertainty – Rising trade tensions and global financial volatility have impacted business investment and consumer confidence.
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Future Policy Approach – The ECB will continue to monitor economic data and adjust rates accordingly, avoiding pre-commitment to a fixed rate path.
Market Reaction & Economic Impact
The Euro (EUR) experienced volatility following the announcement, with investors closely watching Lagarde’s press conference for further insights. The ECB’s decision aligns with global central banks’ cautious approach amid uncertain trade policies and inflation trends.
Sources: ECB official statement, Bloomberg, FXStreet.