The European Central Bank (ECB) has reduced interest rates for the seventh time since June last year, in response to global trade tensions potentially disrupting regional economic recovery. The deposit rate was lowered by 25 basis points to 2.25%, aligning with the expectations of most surveyed analysts. In its monetary policy statement, the ECB removed the term "restrictive" but highlighted the challenges facing Europe.
The ECB noted that the economic growth outlook has deteriorated due to escalating trade tensions. Increased uncertainty could undermine confidence among households and businesses, and the market's negative and volatile response to trade tensions might tighten financing conditions, further pressuring the economic outlook.
Specifically, the deposit rate is now at 2.25%, with 60 out of 62 surveyed economists predicting this outcome. The main refinancing rate was cut to 2.40%, as expected by 48 out of 50 economists. The marginal lending rate was also reduced to 2.65%, matching the expectations of 19 out of 21 economists.
