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ECB cuts deposit rate to 2%, its eighth reduction since June 2024

Inflation dipped below the central bank’s target in May, prompting officials to adopt a data-driven stance on future easing.

The European Central Bank building, right, in Frankfurt, Germany, pictured in June 2025.
A view shows the European Central Bank (ECB) building, in Frankfurt, Germany October 27, 2022. REUTERS/Wolfgang Rattay/File Photo
Image
Dark clouds are seen over the building of the European Central Bank (ECB) before the ECB's monetary policy meeting in Frankfurt, Germany, June 6, 2024. REUTERS/Wolfgang Rattay/File Photo

Overview

  • The ECB cut its deposit facility rate from 2.25% to 2%, marking its eighth reduction since June 2024 after consumer inflation fell to 1.9%.
  • Traders had priced in the quarter-point cut with near certainty, reflecting consensus that easing was warranted as a stronger euro and lower energy costs slow price growth.
  • The bank will follow a data-driven, meeting-by-meeting approach, suggesting policymakers may pause rate cuts in July to assess economic impacts.
  • President Trump’s tariffs on European goods are dragging on business investment and exports, leading the EU to consider retaliatory duties.
  • With the Federal Reserve holding US rates steady, Trump has cited European cuts to pressure Fed Chair Jerome Powell to lower borrowing costs.