$EUINTR -Europe's Interest Rates

EUINTR
(March/2025)
source: European Central Bank


- The ECB lowered the three key interest rates by 25 basis points, as expected, reducing the deposit facility rate to 2.50%, the main refinancing rate to 2.65%, and the marginal lending rate to 2.90%.
This decision reflects an updated assessment of the inflation outlook and monetary policy transmission.
*The ECB acknowledged that monetary policy is becoming meaningfully less restrictive, easing borrowing costs for businesses and households.
Inflation is projected to average 2.3% in 2025, 1.9% in 2026, and 2.0% in 2027, with core inflation also nearing the 2% target.
Although domestic inflation remains elevated due to delayed wage and price adjustments, wage growth is moderating.
Economic growth forecasts were revised downward to 0.9% for 2025 and 1.2% for 2026, reflecting weak exports and investment.
*The ECB remains data-dependent and will adjust its policy as needed to ensure inflation stabilizes around its 2% medium-term target without committing to a specific rate path.