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.