Overview

• The ECB reduced its deposit facility rate by 25 basis points to 2.25%, reaching the top of its estimated neutral rate range.
• This marks the seventh consecutive rate cut since June 2024, as inflation moderates and growth concerns take precedence.
• The decision reflects heightened uncertainty caused by U.S. tariffs, which have worsened the eurozone's economic outlook and investor confidence.
• Policy language was adjusted to remove references to 'restrictive' rates, signaling a more flexible and data-driven approach moving forward.
• Markets anticipate further rate cuts this year, with traders pricing in at least two more reductions as risks to growth persist.