FRANKFURT (GERMANY) (ITALPRESS) – The ECB Governing Council has decided to cut the three key interest rates by 25 basis points. The rates will be reduced to 2.50 percent, 2.65 percent and 2.90 percent, respectively, effective March 12.
Specifically, the decision stems from the updated assessment of the inflation outlook, the dynamics of core inflation and the intensity of monetary policy transmission. The disinflationary process is well underway. “Inflation developments have continued to roughly mirror our experts’ expectations, and the latest projections are closely in line with previous inflation outlooks,” the ECB notes.
Experts now indicate that overall inflation would average 2.3 percent in 2025, 1.9 percent in 2026 and 2.0 percent in 2027. The upward revision of overall inflation for 2025 reflects the more vigorous dynamics of energy prices. Inflation net of the energy and food component would average 2.2 percent in 2025, 2.0 percent in 2026, and 1.9 percent in 2027.
According to the ECB, domestic inflation remains high, mainly because wages and prices in certain sectors are still adjusting to past inflation growth with considerable lag. However, wage growth is moderating as expected, and profits are partially mitigating its impact on inflation. Monetary policy becomes significantly less restrictive as interest rate reductions make new loans to businesses and households less onerous and credit accelerates.
The economy faces lingering difficulties, and experts have again adjusted growth projections downward: to 0.9 percent for 2025, 1.2 percent for 2026, and 1.3 percent for 2027. The Governing Council is determined to ensure that inflation stabilizes durably on its 2 percent medium-term target.
