ECB lowers interest rates by 25 basis points

FRANKFURT -- The European Central Bank (ECB) on Thursday decided to lower key interest rates by 25 basis points.

After the rate cuts, the interest rates on the deposit facility, the main refinancing operations and the marginal lending facility will be decreased to 2.75 percent, 2.9 percent and 3.15 percent respectively, with effect from Feb 5, the central bank said in a press release.

The decision to cut rates was based on "updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission," it said.

While repeating that it is determined to pursue its mandate by bringing inflation sustainably at 2 percent in the medium term, the ECB insisted that it will stick to its data-dependent and meeting-by-meeting approach to determine its future monetary policies.

The economy is still facing headwinds but rising real incomes and the gradually fading effects of restrictive monetary policy should support a pick-up in demand over time, said the press release.

The ECB reiterated that it is not pre-committing to a particular rate path. Market watchers expect the central bank to continue to loosen its monetary policies as inflation concerns ease in the eurozone.