25-Basis Point Cut in European Central Bank Interest Rates – Currency Thoughts

25-Basis Point Cut in European Central Bank Interest Rates

January 30, 2025

As was expected, the Governing Council of the European Central Bank undertook a fifth interest rate cut, and its size was 25 basis points. The cutting edge deposit rate was lowered to 2.75% versus 4.0% prior to last June’s initial reduction. A released explanation of today’s move again stressed that there is not predetermined schedule of reductions, striking a cautious but hopeful mood. 2% inflation is expected to get restored later this year and be sustainable.

The disinflation process is well on track. Domestic inflation remains high, mostly because wages and prices in certain sectors are still adjusting to the past inflation surge with a substantial delay. But wage growth is moderating as expected, and profits are partially buffering the impact on inflation.

Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.

Tags: European Central Bank

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