The decision on the interest rate of the European Central Bank, March 2025

On Thursday, the European Central Bank reduced its interest rates by 25 basic points and updated the language in its decision to say that the monetary policy is becoming “much less restrictive”.

The slice brings the ECB deposit, its key rate, up to 2.5% – a step that markets were widely rated.

“The monetary policy becomes much less restrictive because the reduction of the interest rate makes new borrowings for firms and households, and the growth of the loan is gaining,” the Central Bank said on Thursday.

This noted the changes in the ECB comments when the Central Bank still described its monetary policy as a restrictive one.

Paul Donovan, Chief Economist of UBS Global Wealth Management, wondered whether the ECB language signals the last change in the markets about the potential trajectory at interest rates.

“Honestly, it’s so they would say, right?

“If they were going to say, no, the monetary policy is still restrictive, despite everything we did, they would look pretty nonsense … This is the expression that they were doing what they said,” he said.

Six Central Bank rates over the past nine months have taken place amid unsuccessful economic growth in the region, and as the ghost of the EU import tariffs in the United States has emerged large.

EUR -Zones’ capital inflation remains below 3%, despite the fact that over the past few months of 2024.

The data published earlier this week showed this inflation In February, the region decreased by 2.4%, decreasing compared to January reading, but coming slightly higher than expected. The so-called basic inflation-which deprives the cost of food, energy, alcohol and tobacco, also inflation services also plunged after being proven for several months.

The ECB confirmed on Thursday that the disinfectant process was “good on the way”, but noted that internal inflation remained “high”.

“Most of the main inflation measures indicate that inflation will be resolved around 2% of the average target of the governing councils on a sustainable basis,” it added.

Meanwhile, seasonally adjusted gross domestic product in the eurozone, and in the fourth quarter increased by 0.1%, the latest reading of the statistics agency Eurostat Shown.

The ECB officers’ forecasts on Thursday revised the forecast for the region’s economic growth below, citing “permanent problems”. He now expects 0.9% growth in 2025, 1.2% in 2026 and 1.3% in 2027.

Preliminary This year’s forecasts increased by 1.1%.

“Down the revision of 2025 and 2026 reflects less exports and constant weakness of investment, partly derived from the uncertainty of high trade, as well as a broader uncertainty of politics,” the Central Bank said on Thursday.

The tariffs for the goods imported to the US from Europe have not yet been announced, but is repeatedly threatened with Trump. Currently, the degree of any such responsibilities and the option for negotiations may be On the table.

European countries also seek to enhance their protection and security budgetsAs a relationship between the US and Ukraine cleaned. Increasing protection costs can affect key economic markers such as inflation and growth.

Analysts said CNBC that these geopolitical development can cause more disagreement than usual In the ECB Council when it comes to making decisions of monetary policy in the coming months.

Officials also came up with a split where the so-called “neutral rate”-where politics is not stimulating or restrictive, and when rates can go below to help seize economic expansion.

This is the devastating news. Please update updates.

– CNBC Chloe Taylor contributed to this report.