The European Central Bank (ECB) cut its key interest rates by 25 basis points on Thursday, bringing the rates on the deposit facility, the main refinancing operations and the marginal lending facility to 2.25%, 2.40% and 2.65% respectively. The ECB said the disinflation process is well on track and inflation is expected to settle at around the 2% medium-term target on a sustained basis.
However, the growth outlook has deteriorated due to rising trade tensions. "Increased uncertainty is likely to reduce confidence among households and firms, and the adverse and volatile market response to the trade tensions is likely to have a tightening impact on financing conditions," the ECB said. It repeated that it will maintain a data-dependent and meeting-by-meeting approach to monetary policy and not pre-commit to a particular rate path. It also did not describe its stance as "restrictive" in today's statement.
