ECB cuts key interest rates by 25 basis points

FRANKFURT - The European Central Bank (ECB) on Thursday announced that it would cut key interest rates by 25 basis points.

The interest rate on the main refinancing operations, and the interest rates on the marginal lending facility and the deposit facility will be decreased to 4.25 percent, 4.5 percent and 3.75 percent respectively, with effect from June 12, the central bank said in a statement.

"Based on an updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission, it is now appropriate to moderate the degree of monetary policy restriction after nine months of holding rates steady."

Although its latest projections point to higher inflation for 2024 and 2025, the ECB pointed out that inflation has fallen by more than 2.5 percentage points and the inflation outlook has improved markedly since September 2023.