On Thursday 17th April the Governing Council of the European Central Bank (ECB) met and cut all three key interest rates by 25 basis points.
It is worth noting that this is the seventh time in a row that the regulator has taken this decision.
The new deposit rate will be 2.25%, the base rate 2.4% and the marginal lending rate 2.65%. Interestingly, the ECB's decision was in line with the expectations of analysts and market participants. Analysts polled earlier by Bloomberg were almost unanimous in predicting that the ECB's deposit rate would be cut by a quarter of a point to 2.25%. Only one of the 62 respondents predicted a pause, while another expected a larger cut.
Meanwhile, inflation in the eurozone has continued to move in line with officials' expectations. Both headline and core inflation fell in March. The euro area economy is becoming more resilient to global shocks, but the growth outlook has deteriorated due to rising trade tensions.
Increased uncertainty is likely to reduce household and business confidence, and adverse and volatile market reactions to trade tensions are likely to tighten financing conditions. These factors could further weigh on the economic outlook for the euro area," the ECB said.
The Governing Council remains firmly committed to returning inflation to the 2% objective and stands ready to adjust all available instruments to achieve this objective.
In the current environment of exceptional uncertainty, the Governing Council intends to use a data-driven, meeting-tomeeeting approach to determine the appropriate monetary policy stance.
Interest rate decisions will be based, inter alia, on the assessment of the inflation outlook in the light of incoming economic and financial data, the evolution of core inflation and the strength of monetary transmission. The ECB does not have a predetermined plan regarding the path of interest rates," the April press release stated.