ECB moves forward with interest rate cuts

This Thursday, June 6th, the cut in key rates was decided by the Council of the European Central Bank (ECB), which will move forward with a reduction of 25 basis points. This change will bring down the various associated rates, namely the permanent facility interest rate (which drops to 3.75%), the refinancing interest rate (4.25%) and the interest rate applicable to permanent transfer liquidity (4.5%).


This review will take effect from next Wednesday, June 12th, and aims to alleviate families' burden on credit, having been taken in favor of the slowing trend in inflation.

"Based on an updated assessment of the inflation prospect, underlying inflation dynamics and the strength of monetary policy transmission, it is now appropriate to moderate the level of monetary policy tightening, after interest rates have been held constant for nine months" , indicates the ECB.

The decision was already awaited by investors and analysts, representing a new milestone in the monetary policy of the European regulatory bank, as it is the first break in the rate after almost five years of cycles of consecutive increases, which took place between July 2022 and September 2022. last year, a development that increased the price of the Euro by 450 basis points.

The bank led by Christine Lagarde indicates that this was a decision taken in light of "the inflation outlook", which has "improved significantly".However, he points out: "underlying inflation also slowed down, reinforcing signs of weakening price pressures, with inflation expectations falling across all horizons."

Source: CASASAPO