The European Central Bank (ECB) has lowered its key interest rate by 25 basis points. The bank announced the decision on Thursday after its rate-setting meeting in Frankfurt am Main.
The deposit facility rate, as well as the rates for the main refinancing operations and the overnight refinancing facility, will be set at 3.75%, 2.90% and 3.15%, respectively, as of February 5, the ECB council decided.
“The disinflation process is progressing well” the central bank wrote in its justification. “Inflation has largely continued to develop in line with projections and is expected to return to the medium-term target of the ECB council of two percent by the end of the year.”
The ECB council assumes that inflation will stabilize in the medium-term target range of two percent. “Internal inflation remains high, primarily due to the fact that wages and prices in certain sectors are still adapting with a considerable delay to the strong inflation surge of the past” the bank said.
“We are determined to ensure a sustainable stabilization of inflation at the medium-term target of two percent. The setting of the appropriate monetary policy course will depend on the data and will be decided on a meeting-by-meeting basis.