The Governing Council of the European Central Bank has cut interest rates for the first time since 2019. What a remarkable event!
On June 6, the regulator lowered interest rates by 0.25 basis points. Notably, the ECB had left its three key rates unchanged at the previous five policy meetings. After the last meeting, the main refinancing rate was cut to 4.25%. The rates on the marginal lending facility and the deposit facility were reduced to 4.5% and 3.75% respectively.
Thus, the European regulator eased monetary policy after nine months of holding rates steady. The move was based on an updated assessment of the outlook for headline and core inflation. These factors prompted a well-considered decision on monetary policy.
Since the ECB meeting in September 2023, inflation in the euro area has fallen by more than 2.5 percentage points. Core inflation has also decreased, signaling easing price pressures and leading to a significant decline in inflation expectations.
