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3w ago

ECB Lowers Deposit Rate to 2.0% in Eighth Consecutive Cut

Following inflation’s fall below 2%, policymakers are poised to hold any further cuts in reserve.

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Die Sonne geht hinter der Europäischen Zentralbank in Frankfurt am Main unter
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Die Inflation in der Euro-Zone geht zurück.

Overview

  • On June 5, the ECB cut its deposit rate by 25 basis points to 2.0%, marking the eighth reduction since June 2024.
  • Inflation in the euro area dipped to 1.9% in May, slipping beneath the central bank’s 2% goal and reinforcing its dovish shift.
  • Officials expect the eurozone economy to expand by just 0.9% in 2025 and 1.1% in 2026, signaling only modest growth ahead.
  • The move will further depress savers’ returns, with average yields on daily savings accounts now around 1.27%.
  • Policymakers pointed to trade tensions from President Donald Trump’s tariff policies as a key downside risk, underpinning their signal to pause further easing.