Next Thursday (6/3), the European Central Bank is expected to make another reduction in deposits by 25 basis points, Thursday consecutive since last September and the sixth in total since last June, when it began the monetary policy.

The deposit rate is expected to be formed at 2.5% And respectively, the Euribor, which is the reference index in the calculation of installments for loans at a floating rate, will be formed. Therefore, the installments for the these loans.

The minutes of the last meeting of the ECB on January 29/30 shows that its 26 -member Board of Directors was that interest rates should be further reduced in order not to prevent the eurozone’s economic recovery. Considering the goal of inflation for 2% in 2025, as it is very likely, the ECB officials have now turned their eyes to the economy, which has been moving between wear and tear for two years.

‘While the process of deflation is on a good run, policy interest rates could move further toward one neutral level to was avoided a unnecessary retention of the economy. However, the risks to growth have not shifted to the extent that it would require the acceleration of the course to a neutral attitude (ed: which neither strengthens nor burdening growth) ‘, ”,”, ”,”, ”,” The ECB officials supported.

Although the ECB avoids accurately identifying what the neutral interest rate is, as it is not a size that one can notice but it is a theoretical construction with all the uncertainties it entails in a recent study published (7 February) calculated that with Today’s data is between 1.75% and 2.25%. It follows that the ECB’s deposit rate could be further reduced and after a decrease in late January remains higher than the upper limit of the neutral interest rate.

About inflationECB’s leading economist Philip Lain noted during a recommendation at the last meeting of the Central Bank that his march was slightly better than forecasts in recent months despite an increase to 2.4% in December. He referred to a precursor of the ECB (Persistent and Common Component of Inflation), “who has the best prognostic power than any underlying inflation for future general inflation”. This index said there was a close to 2% and December, “suggesting that general inflation is expected to stabilize around the ECB target.”

The meeting on January 29/30 was the announcement on January inflation, which recorded a small (expected) increase to 2.5%, and tomorrow, Clean Monday, the Eurostat will also announce the information for Price March in February. Unless there is a negative surprise, the road will have been paved for the ECB to announce the new interest rates on Thursday.

The markets they are waiting Further reduction in interest rate deposits at 2% within 2025which is also awaited by members of the ECB, such as Bank of Greece Governor Yiannis Stournaras, French central banker, Francois Vilua de Galo and others.

From the ECB’s next meeting in April, however Decisions on interest rate cuts are likely to be more difficult to make. According to the minutes, the last meeting “has been argued that more attention is required for the extent and rate of further interest rates reductions as they approach the neutral ground due to the uncertainties that exist”.

Also, “It was expressed that the neutral interest rate is likely to be higher than before the pandemic” As in recent years, demand for savings has increased due to higher green and digital transition and growth in public debt worldwide. This view was also publicly applied by ECB Executive Council member Isabelle Snabel, which appears more cautious about further interest rates.

In addition, always according to the minutes, “there were some evidence that suggests a shift in the balance of risks to rise to December”, such as the somewhat increased energy costs and the impact on the duties that US President Donald wants to impose.