ECB Cuts Rates by 25 Basis Points for Fourth Time in 2024, Aims for 2% Inflation

Dec 12, 2024, 01:26 PM

The European Central Bank (ECB) has cut its key interest rates by 25 basis points, marking the fourth reduction this year. This decision brings the deposit rate to 3%, the main refinancing operation rate to 3.15%, and the marginal lending facility rate to 3.4%. The move was based on the ECB's updated assessment of inflation, which is now expected to reach the 2% target in the medium term. Despite the cut, the ECB has signaled a shift away from its previous stance of keeping rates restrictive for as long as necessary, opting instead for a data-dependent approach to future monetary policy decisions. This adjustment comes as the eurozone economy shows signs of a slower recovery than previously anticipated, with revised growth forecasts for 2024, 2025, and 2026 indicating weaker expansion. The ECB's actions reflect a response to the current economic climate, characterized by geopolitical tensions, potential trade frictions, and the need to support domestic demand through lower borrowing costs.