ECB Cuts by 25BP; Growth Revised Down, Headline Inflation Up to 2.3% in 2025

6 March 2025

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

With the cut, the three ECB interest rates, effective from March 12, are at 2.5% for the deposit facility, 2.65% for the main refinancing operations and 2.9% for the marginal lending facility.

‘Monetary policy is becoming meaningfully less restrictive, as the interest rate cuts are making new borrowing less expensive for firms and households and loan growth is picking up’, the ECB said in a press release.

The ECB now projects HICP of 2.3% in 2025,1.9% in 2026 and 2.0% in 2027, with the measure ex-energy and food at 2.2% in 2025, 2.0% in 2026 and 1.9% in 2027.

‘The upward revision in headline inflation for 2025 reflects stronger energy price dynamics’, said the document.

Economic growth is revised downwards to 0.9% in 2025,1.2% in 2026 and 1.3% in 2027, according to the updated forecasts.

‘The disinflation process is well on track’, according to the ECB. ‘Inflation has continued to develop broadly as staff expected, and the latest projections closely align with the previous inflation outlook.’