The European Central Bank (ECB) has cut its key interest rates as the markets expected, marking its second reduction this year following a move in June.
As anticipated, the ECB reduced its interest rates on Thursday afternoon during its September meeting.
New interest rates have been set at 3.65% for main refinancing operations, 3.90% for the marginal lending facility, and 3.50% for the deposit facility.
The interest rate on the main refinancing operations is the rate banks pay when they borrow money from the ECB for one week, while the rate on the deposit facility is what banks can use to make overnight deposits with the Eurosystem. The rate on the marginal lending facility offers overnight credit to banks from the Eurosystem.
"The Governing Council today decided to lower the deposit facility rate – the rate through which it steers the monetary policy stance – by 25 basis points. Based on the Governing Council’s updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission, it is now appropriate to take another step in moderating the degree of monetary policy restriction," an ECB statement said.
The latest ECB decision comes as inflation has eased. Eurozone consumer price growth slowed to 2.2% in August, according to flash estimates, marking the slowest increase since July 2021.
