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ECB lowers the interest rate – for the first time since 2019

The European Central Bank (ECB) takes the back of the Riksbank and lowers its interest rates by 0.25 percentage points. At the same time, they raise the inflation forecast to 2025.

» Updated: 16 July 2024, 14:58

» Published: 06 June 2024

ECB lowers the interest rate – for the first time since 2019
Photo: Michael Probst/AP/TT

European Central Bank (ECB) backs Sweden's central bank, Riksbanken, and lowers its interest rates by 0.25 percentage points.

At the same time, they raise their inflation forecast to 2025.

The decision means that the so-called deposit rate lands at 3.75 percent.

In conjunction with the interest rate decision, the ECB updated its forecasts. They now believe in a slightly higher inflation in 2024 and 2025 compared to earlier calculations. But it's nothing to sleep over, according to SEB economist Marcus Widén.

The interest rate decision marks the first time since 2019 that the ECB has chosen to lower the rate and the first time ever that it has gone ahead of the US central bank in starting a monetary policy easing cycle.

She emphasizes that the ECB "has not made up its mind in advance" regarding future interest rate decisions and that monetary policy will remain restrictive "as long as it is needed" to keep inflation in check.

Despite the ECB's cautious tone, Marcus Widén believes that this will be the start of a series of rate cuts, albeit at a slow pace.

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By TTThis article has been altered and translated by Sweden Herald

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