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Supervisor Elham AbolFateh
Editor in Chief Mohamed Wadie

European Central Bank Cuts Interest Rates by 0.25% for First Time Since 2019


Thu 06 Jun 2024 | 06:42 PM
H-Tayea

The European Central Bank (ECB) has announced a reduction in interest rates for the first time since 2019. The ECB's Monetary Policy Committee decided on Thursday to cut interest rates by 25 basis points, bringing them to 4.25%, as reported by Cairo News.

The ECB also reduced the benchmark deposit rate by 25 basis points to 3.75%.

This decision marks the beginning of a potential easing cycle, but ongoing price and wage pressures could delay further rate cuts for several months. After an unprecedented series of interest rate hikes in the Eurozone since mid-2022 to curb soaring energy and food costs, inflation is slowly moving towards the ECB's target of 2%.

The ECB's Governing Council stated, according to Sky News, "Based on an updated assessment of inflation forecasts, core inflation dynamics, and the strength of monetary policy transmission, it is now appropriate to ease the degree of monetary policy restriction after nine months of holding rates steady."

Investors are now eagerly awaiting the remarks of ECB President Christine Lagarde at her press conference later today.

The ECB's interest rate cut positions it ahead of other central banks in seeking to lower rates, a move that precedes the U.S. Federal Reserve, which remains in a challenging situation due to inflation in the United States. However, Lagarde emphasized in her last press conference that ECB officials "rely on data, not on the actions of the Federal Reserve."