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Christina Lagard, President of the European Central Bank (ECB), at the Hurt School in Berlin, Germany, Monday, May 26, 2025.
Crystan sorry/Bloomberg via Getty Images
On Thursday, the European Central Bank announced the finishing interest rate with 25 bases, taking a deposit rate to 2%, declining compared to the maximum in mid -2013 by 4%.
On the eve of the announcement traders prices for almost 99% chances of reducing a quarter of points according to LSEG data.
“In particular, the decision to reduce the deposit rate – the rate by which the ruling council manages the monetary policy position – is based on an updated assessment of inflation, the dynamics of basic inflation and the strength of the transfer of monetary policy,” the statement reads.
In May, eurozone inflation decreased below 2% target target, affected by 1.9% than expected according to preliminary The data published earlier this week.
However, economic growth is still insufficient, even when interest rates decreased. The latest estimate shows that in the first quarter of 2025 the euro zone expanded by 0.3%.
The Central Bank’s decision comes in critical time for the Eurozone economy, as enterprises and politicians face increased uncertainty as a result of geopolitical tensions.
US President Donald Trump’s tariff policy raises the main problem, and the responsibilities that are expected to largely weigh economic growth. Some of the sectors, in particular, can greatly get into Europe because they affect key industries such as steel and car.
The influence of inflation tariffs is less clear and may depend on when and how the European Union retreats back, politicians said. Currently, measures from the EU are in pause, but the bloc leaders said they are ready to implement them if necessary. The marks also remain about how plans for increasing protection costs throughout Europe can affect the economy.
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