Overview

• The European Central Bank reduced its key interest rate by 25 basis points, marking the fourth rate cut this year, with the deposit rate now at 3.0%.
• ECB President Christine Lagarde expressed confidence in inflation nearing the 2% target but emphasized that the fight against inflation is not yet over.
• The central bank faces challenges from weak economic growth in the eurozone, with GDP forecasts downgraded to 1.1% for 2025 and 1.4% for 2026.
• Geopolitical uncertainties, including potential U.S. tariffs under President-elect Donald Trump and political instability in Germany and France, add to economic pressures.
• While markets anticipate further rate cuts in 2025, Lagarde maintained that future decisions will remain data-dependent and avoided committing to a specific rate path.