ECB Cuts Deposit Rate by 25BP as Core Inflation Revised Up, Growth Down

12 September 2024

By Marta Vilar – FRANKFURT (Econostream) – The European Central Bank’s Governing Council on Thursday decided to cut its key interest rates by 25bp, as widely expected by markets and analysts.

The deposit facility rate (DFR) was cut by 25bp while the rate on main refinancing operations (MROs) and the rate on the Marginal Lending Facility (MLF) were reduced by 60bp each.

‘Recent inflation data have come in broadly as expected, and the latest ECB staff projections confirm the previous inflation outlook. Staff see headline inflation averaging 2.5% in 2024, 2.2% in 2025 and 1.9% in 2026, as in the June projections’, the ECB said in a press release. ‘Inflation should then decline towards our target over the second half of next year’.

With the cut, the three ECB interest rates, effective from 18 September, are at 3.50% for the deposit facility, 3.65% for the main refinancing operations and 3.90% for the marginal lending facility.

The September projections for headline inflation remained unchanged compared to June and core inflation was revised slightly upwards, the ECB said.

Ex-energy and food, the ECB sees euro area inflation at 2.9% in 2024, 2.3% in 2025 and 2.0% in 2026. Economic growth was revised downwards to 0.8% in 2024, 1.3% in 2025 and 1.5% in 2026, according to the updated forecasts.