As announced by the European Central Bank (ECB), its Governing Council has decided to reduce interest rates by 0.25% during its latest meeting. As a result, the main interest rate (the deposit facility rate) now stands at 2.5%.
This marks the second consecutive rate cut of the year, following a similar 0.25% reduction on February 5. The ECB's decision comes amid rising tensions in the markets, driven by fiscal loosening in Germany and the ongoing trade war initiated by the United States through the imposition of tariffs.
It is important to note that the ECB has reduced interest rates five times since June, as inflation continues to ease and economic growth remains weak.
The latest rate cut is based on updated projections that indicate a favorable inflation outlook. Inflation is expected to fall to 2.3% in 2025, 1.9% in 2026, and 2% in 2027. Additionally, the economic recovery in the Eurozone is expected to slow, with GDP growth forecasted at 0.9% in 2025, 1.2% in 2026, and 1.3% in 2027.
In comparison, the ECB’s previous forecast, published in December 2024, projected GDP growth of 1.1% in 2025, 1.4% in 2026, and 1.3% in 2027, following a 0.7% increase in the previous year.
