Gian Ehrenzeller/EPA
Christine Lagarde
Interest rates Directors descend 25 base points. Economic growth: 1st strongest quarter, weaker perspectives for the rest of the year.
The European Central Bank (ECB) has lowered today the three interest rates in 25 base points, the eighth descent in a year, putting the rate of deposits in 2,00%, the lowest level since the beginning of 2023.
Today gathered in Frankfurt, Germany, the ECB Council has reduced the interest rate applicable to the permanent deposit ease to 2.00%, while the interest rates of main refinancing operations and the permanent ease of liquidity assignment decreased to 2,15% e 2,40%, respectively.
This interest rate of the permanent deposit facility (2%) is the lower number since December 2022. And, it remembers, it is the middle of the interval 1.75% -2.25% that the Central Bank has defined as “neutral”, not boosting or restricting economic activity.
These changes will have effects from June 11, next Tuesday.
Inflation
O BCE reduced in three tenths to inflation average planned for the eurozone in 2025, to 2,0%, in line with the goal it maintains as a reference for monetary policy decision making.
Similarly, it reduced in three tenths, to 1,6%, estimated inflation for 2026, while keeping unchanged in 2,0% the forecast for 2027.
In a disclosed after the meeting of the Board of Governors who today took place in Frankfurt, Germany, the ECB states that the 0.3 percentage points over 2025 and 2026, compared to the March projections, “mirror mainly. lower assumptions for the prices of energy products and a stronger euro ”.
Eurosystem experts project that inflation excluding prices from energy and food products is an average of 2.4% in 2025 and 1.9% in 2026 and 2027, practically without changes compared to March.
“Most measures of underlying inflation suggest that the inflation will stabilize, In a sustained base, around the average objective of 2% of the ECB council, ”says the Central Bank.
According to detail, the wage growth “It is still high, but it continues to register a notorious moderation,” the profits are “partially dampening its impact on inflation.”
“The fears decreased that added uncertainty and the volatile response of markets to commercial tensions in April would lead to an increase in the restriction of financing conditions,” he concludes.
Growth
The ECB kept unchanged in 0,9% the forecast of economic growth euro zone in 2025, but reviewed down a tenth, to 1,1%, the estimate for 2026.
Regarding 2027, Central Bank economists maintained the forecast of gross domestic product growth (Start) of 1,3%, in line with the estimate made in March.
Maintenance of projection regarding growth in 2025 “reflects a First trimester stronger than expectedcombined with weaker perspectives for the rest of the year”Explains the statement.
Although it predicts that the uncertainty Around commercial policies “weigh on business investment and exports, especially in the short term”, the ECB understands that the increase in public investment in defense and infrastructures “will increasingly support growth in the medium term”.
At the same time, “higher real income and a robust job market will allow families to spend more,” which, along with the most favorable funding conditions, “should make the economy more resilient to world shocks.”
The Central Bank also indicates that, in a context of high uncertainty, experts have also evaluated some mechanisms through which different trade policies could affect growth and inflation in alternative illustrative scenarios.
In this scenario analysis, which will be published later, if in the coming months there is a greater escalation of the commercial tensions, Growth and inflation would be below the foregoing scenario of the projections.
On the other hand, if commercial tensions were resolved with a favorable result, growth and, to a lesser extent, inflation would be above the expected scenario.
