The European Central Bank (ECB) announced on Thursday that it lowered its key interest rates by 25 basis points (bps). The deposit facility rate will be decreased to 3.50%, while the interest rates on the main refinancing operations and the marginal lending facility will be cut to 3.65% and 3.90% respectively. The ECB reiterated that it is implementing changes to its operational framework for implementing monetary policy on September 18, resulting in the spread between the interest rate on the main refinancing operations and the deposit facility rate being set at 15 bps.
The ECB projected inflation will average 2.5% in 2024, 2.2% in 2025 and 1.9% in 2026, unchanged from June. Core inflation forecasts have been revised up to account for higher-than-expected services inflation, to 2.9% this year, 2.3% in 2025 and 2% in 2026. Meanwhile, the Eurozone economy is expected to grow by 0.8% in 2024, rising to 1.3% in 2025 and 1.5% in 2026, slightly lower than in June.
