The European Central Bank (ECB) has decided to cut the deposit facility rate by 25 basis points to 3.25% today, while adjusting the main refinancing rate to 3.40% and the marginal lending facility rate to 3.65%. This is the third rate cut this year, following recent declines in inflation across the eurozone.
Florian Heider, Scientific Director of the Leibniz Institute for Financial Research SAFE, comments on the decision:
“This latest ECB rate cut is a logical step in response to falling inflation and weakening economic growth. With this cautious move, the ECB is keeping a close eye on the potential for rising inflation due to high wage agreements and price increases in the services sector.
In light of the Fed's last rate cut by 50 basis points, I also believe another ECB rate cut is likely later this year. In a period of ongoing political uncertainty, it is wise to proceed cautiously and data-dependently, assessing conditions from meeting to meeting.”
Scientific Contact
Prof. Dr. Florian Heider
Scientific Director, Co-Director Department "Financial Intermediation"
