OR European Central Bank reduced the interest rates by 25 basis points at 2.75%, By confirming the estimatesat the fifth consecutive reduction at the same level, as inflation moves close to its 2%target.

Interest rates on main refinancing and marginal funding facility are reduced to 2.90% and 3.15% respectively.

Analysts who participated in a Bloomberg poll provided for earlier unanimously reducing interest rates by one quarter of the unit.

The hope is that the relaxation of monetary policy will give a breath to an economy that is difficult to grow, especially as political friction upset consumers and businesses in the two largest eurozone member states.

Reduce interest rates this week “will be an easy decision for the Board of Directors, like another in March,” said Evelyn Herrmann, European Economist at Bofa Global Research. “After that, things could become more interesting and possibly more controversial.”

What does the ECB say

According to the ECB’s announcement, the Board of Directors today decided to reduce the ECB’s three main interest rates by 25 basis points. In particular, the Board of Directors’ decision to reduce the interest rate on the acceptance of deposits – the interest rate by which the Board of Directors gives the direction of monetary policy – is based on its updated evaluation of inflation prospects, the dynamics of underlying inflation and inflation and for inflammation the intensity with which monetary policy is transmitted.

The process of diminishing inflation is on the right track. Inflation continued to evolve into alignment with expert projections and is expected, within the year, to return to the medium -term goal of the 2% set by the Board of Directors. Most of the underlying inflation indicates that inflation will stabilize around the target on a sustainable basis. Domestic inflation remains high, mainly because wages and prices in some areas are still adapted with a significant delay in the previous intense rise in inflation. But, as expected, the rate of wage growth is mitigated and the profits partly absorb the impact of inflation.

Recent interest rates cuts by the Board of Directors gradually make new loans less expensive for businesses and households. At the same time, funding conditions continue to be strict, including because monetary policy remains restrictive and previous interest rates continue to be broadcast on the outstanding balance of credit, while some loans that reach their expiration are renewed at higher interest rates. The economy is still facing adverse factors, but the rise of real incomes and the gradual weakening of the effects of restrictive monetary policy are expected to support the recovery of demand over time.

The Board of Directors is determined to ensure that inflation will be stabilized in a medium -term goal of 2%. It will follow an approach based on the available data and will make decisions from a meeting at a meeting to determine the appropriate direction of monetary policy. Specifically, the decisions of the Board of Directors on interest rates will be based on the evaluation of the prospects for inflation in the light of incoming economic and financial data, the dynamics of underlying inflation and the intensity with which monetary policy is transmitted. The Board of Directors is not committed in advance for a specific course of interest rates.

Fed predicted yesterday – Fed – kept interest rates unchanged at 4.25%-4.50%

It is recalled that US Federal Bank (Fed) kept its interest rates unchanged Yesterday at its first meeting for this year and the first on the Presidency of Trump, something that had already been preceded by its previous meeting, while noting that the “progress” has noted on the return of inflation to its target. 2% is expected to continue this year.

Specifically, the Federal Open Market Committee unanimously decided to maintain the main interest rate of the US Central Bank on Wednesday. In the range of 4.25%-4.50%after three consecutive cuts that reduced borrowing costs by a full percentage point in the last months of 2024.

In their announcement, issued after the two -day meeting of the Commission, Fed officials reiterated that Inflation remains ‘somewhat increased’but removed the 2%progress report, while adding that “economic activity continued to extend at a steady pace” and that “the unemployment rate has stabilized at a low level in recent months, while conditions in the labor market They remain constant. “

FOMC policymakers also repeated that Risks in inflation and employment are ‘almost balanced’ and the “size and time” of subsequent interest rates will depend on the incoming data and prospects of inflation.

As economists note, the strong growth of the US economy combined with the stable labor market allows Fed policymakers to keep a standby and expect more information on the course of inflation before adjusting interest rates. At the same time, this move gives them time to evaluate how President Donald Trump’s policies on immigration, duties and taxes could affect the economy.

Regarding the intentions of the Federal Bank of the US for the continuation, policymakers “see” Another two interest rates reductions in 2025one until June and the second to the end of the year, something FOMC said after the December meeting.

In any case, Fed officials reiterated that they were ready to adapt the monetary policy if needed, so as to be in line with the goals of the Central Bank, which is to reduce inflation towards the 2%target, while maintaining the maximum possible Employment. In this context, it will continue to evaluate a wide range of data such as labor market conditions, inflationary pressures and prospects of inflation, as well as financial and international developments.