European Central Bank (ECB) has cut its key interest rate by 25 basis points again. The central bank announced this on Thursday after its rate-setting meeting in Frankfurt am Main.
It is the fourth rate cut this year. The interest rates for the deposit facility, the main refinancing operations, and the marginal lending facility will be set at 3.00%, 3.15%, and 3.40%, respectively, as of December 18, the ECB council decided.
“The disinflation process is progressing well” the central bank wrote in justification. “The experts of the Eurosystem expect an average inflation of 2.4% for 2024, 2.1% for 2025, and 1.9% for 2026. For 2027, when the expanded EU emission trading system is introduced, they expect an average of 2.1%.”
The ECB council assumes that inflation will settle in the medium-term target range of the ECB council of 2% in the long run. “The internal inflation has slightly decreased, but remains high. This is mainly due to the fact that wages and prices in certain sectors are still adapting with a considerable delay to the strong inflation surge in the past” the central bank said.
“We are determined to ensure a timely return of inflation to the medium-term target of 2%”, the ECB council confirmed. The setting of the appropriate level and duration of the restrictive level by the ECB council will, however, continue to depend on the data and will be decided from meeting to meeting.