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ECB cuts key interest rates by 25 bps as inflation eases

17 Apr '25

1 min read

ECB cuts key interest rates by 25 bps as inflation eases

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European Central Bank has cut its key interest rates by 25 basis points, effective April 23, lowering the deposit facility rate to 2.25 per cent.
The decision reflects confidence in the ongoing disinflation trend and moderating wage growth, though ECB flagged trade tensions and weakening growth as risks.
It will continue to take a data-dependent approach without pre-committing to future rate paths.

European Central Bank (ECB) has cut its three key interest rates by 25 basis points, citing a sustained disinflation trend and deteriorating growth outlook. Effective April 23, 2025, the deposit facility rate will stand at 2.25 per cent, the main refinancing rate at 2.40 per cent, and the marginal lending facility rate at 2.65 per cent.

The move, driven by updated inflation forecasts and improved monetary policy transmission, reflects confidence that inflation is converging towards the ECB’s 2 per cent medium-term target. March data showed a continued decline in both headline and core inflation, with services inflation easing significantly and wage growth moderating, the Council said in a statement.

However, the ECB flagged rising trade tensions and market volatility as key risks to euro area growth, warning that tighter financing conditions and increased uncertainty may dampen household and business confidence.

The ECB reiterated its commitment to a data-dependent, meeting-by-meeting approach, with no pre-commitment to a fixed rate path.

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