The European Central Bank (ECB) lowered its three key interest rates by 25 bps on Thursday (Oct. 17), as expected, following similar moves in September and June. The deposit facility, main refinancing operations, and marginal lending facility rates will now be 3.25%, 3.40%, and 3.65%, respectively.
The Governing Council, led by ECB President Christine Lagarde, stated its decision was based on the newest examinations and projections for the inflation outlook, which showed that disinflation “is well on track.” In September, inflation in the Eurozone (1.8%) fell below the ECB’s target of 2% for the first time in more than three years.
Lagarde said at a press conference that the 25-basis point cut was the only one on the table and that the Governing Council made a unanimous decision to adopt it. “We thought it was the appropriate decision to make” taking into account data indicators and the assessment of the disinflationary process.
The ECB chief also expressed some concern over the recent economic data. “The latest data is all heading in the same direction, downwards, and points to more sluggish growth,” she said.
However, she refused to pre-commit an easing in December, instead stressed on the data-dependency approach. Four sources close to the matter told Reuters a fourth cut in December is likely unless economic or inflation data turns around in the coming weeks.
