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Economic news
12.12.2024

ECB lowers its deposit facility rate by 25 basis points, as widely anticipated

The European Central Bank (ECB) reduced its deposit facility rate by 25 basis points to 3.00 per cent on Thursday, as widely anticipated. That marked the fourth rate decrease by the ECB this year.

In addition, the ECB’s interest rates on its main refinancing operations and marginal lending facility were lowered by 25 basis points each to 3.15 per cent and 3.40 per cent, respectively. Those moves also were in line with markets’ expectations. 

In its policy statement, the ECB noted:

- Today’s decision is based on the updated assessment of inflation outlook, dynamics of underlying inflation and strength of monetary policy transmission;

- Disinflation process is well on track;

- Central bank’s staff sees headline inflation averaging 2.4% in 2024, 2.1% in 2025, 1.9% in 2026 and 2.1% in 2027;

- For inflation excluding energy and food, staff projects an average of 2.9% in 2024, 2.3% in 2025 and 1.9% in both 2026 and 2027;

- Most measures of underlying inflation suggest that inflation will settle at around Governing Council’s 2% medium-term target on a sustained basis;

- Financing conditions are easing but continue to be tight because monetary policy remains restrictive;

- Staff now expects a slower economic recovery than in the September projections. The economy is now seen growing by 0.7% in 2024, 1.1% in 2025, 1.4% in 2026 and 1.3% in 2027;

- Gradually fading effects of restrictive monetary policy should support a pick-up in domestic demand;

- Governing Council is determined to ensure that inflation stabilises sustainably at its 2% medium-term target;

- Governing Council will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance;

- Governing Council is not pre-committing to a particular rate path

- Governing Council stands ready to adjust all of its instruments within its mandate to ensure that inflation stabilises sustainably at its 2% target over the medium term

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