Eurostat GDP growth rate data

ECB Cuts Rates by 25 bps for Third Time Since June as Inflation Falls Below Target

Oct 17, 2024, 12:22 PM

The European Central Bank (ECB) has cut its key interest rates by 25 basis points for the third time since June, reducing the deposit facility rate to 3.25% from 3.50%. The move, widely anticipated by markets, marks the first back-to-back rate cut in 13 years and reflects concerns over a stagnating eurozone economy and inflation falling below the ECB's 2% target faster than expected. The main refinancing operations rate now stands at 3.40%, down from 3.65%, while the marginal lending facility rate has been reduced to 3.65% from 3.90%. In its policy statement, the ECB noted that the "disinflationary process is well on track," citing recent downside surprises in economic activity indicators and acknowledging that financing conditions remain restrictive. The central bank emphasized its determination to return inflation to its 2% target in a timely manner and indicated that it would keep policy rates "sufficiently restrictive for as long as necessary." The rate cut aims to support the eurozone's weakening economy amid fears of a more pronounced slowdown and to ensure that inflation continues to decline toward the target.