Catenaa, Thursday, March 06, 2025- The European Central Bank (ECB) lowered its interest rates on Thursday, the sixth consecutive time since June, as the easing cycle tends to be at its end.
The interest rates on the deposit facility, the main refinancing operations and the marginal lending facility will be decreased to 2.50%, 2.65% and 2.90% respectively, with effect from 12 March 2025.
The decision comes after inflation cooled to 2.4% in the eurozone in February, higher than the forecasted 2.3%.
“The disinflation process is well on track,” the ECB reiterated. President Christine Lagarde said it will now meet its goal very early in 2026, rather than this year as envisaged before.
She repeated that policymakers won’t commit to any particular path for borrowing costs, since the backdrop is changing “dramatically” from one day to another.
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, meanwhile, offers overnight credit to banks from the Eurosystem.
The ECB said monetary policy is becoming meaningfully less restrictive, as the interest rate cuts are making new borrowing less expensive for firms and households and loan growth is picking up.
At the same time, a headwind to the easing of financing conditions comes from past interest rate hikes still transmitting to the stock of credit, and lending remains subdued overall.
ECB staff have again marked down their growth projections – to 0.9% for 2025, 1.2% for 2026 and 1.3% for 2027.
