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ECB Set to Deliver Seventh Rate Cut as Trade Pressures Mount

The European Central Bank is expected to lower its key deposit rate by 25 basis points to 2.25% on Thursday, driven by economic uncertainties tied to US tariff policies.

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Overview

  • The anticipated rate cut marks the seventh adjustment since the ECB began easing monetary policy in mid-2024, reducing the deposit rate from 4% to 2.25%.
  • Market participants widely expect the 25 basis point reduction, with pricing models indicating a 95% probability of the move.
  • The decision comes as economic turbulence from Donald Trump's trade and tariff policies increases pressure on the ECB to support growth.
  • Lower interest rates are expected to impact savings products, with banks likely to pass on reduced returns for short-term deposits such as Tagesgeld accounts.
  • ECB President Christine Lagarde is expected to emphasize a data-driven approach in future decisions, as inflation concerns recede and geopolitical uncertainties persist.