By Vangelis Dourakis

Following the crazy rally of successive euro-epithelial increases, their slow but gradual decline comes: Tomorrow Thursday 6 March, the European Central Bank is moving forward-all signs-in another one another Reduction of deposit rate by 25 basis points. It is the fifth consecutive since last September and the sixth in the early summer of ’24, and in June, when this cycle of monetary policy began.

OR Christine LagardeIt is therefore expected to announce further “clipping” of the basic interest rates of the euro, which will Give “breaths” And in domestic households that maintain floating interest rates, connected to European.

How much is the interest rates to fall

The deposit rate is estimated to be configured in 2.5% (after ‘scissors’ 0.25%) and respectively will be configured and the Euribor which is the reference index in the calculation of installments for most floating rate loans. Therefore, the installments for these loans will also be reduced.

If this estimate is verified and another reduction is resulted in, then the debate will shift to whether there is room for further “scissors” and to the point.

It is a discussion that of course interests, both households exposed to mortgages or other floating interest rates, as well as businesses looking for the ‘Cheap money’.

Considering the goal of 2% in inflation in 2025, its officials ECB They have now turned their eyes to the course of the economy, which has been moving between wear and tear for two years.

As they argue themselves, risks to grow ‘Neutral’ attitude (ed: which neither strengthens nor burdening growth): Although the ECB avoids accurately identifying what is the ‘neutral’ interest rate – that is essentially a theoretical construction with all the uncertainties it entails – in a recent research (7 February). between 1.75% and 2.25%.

It follows that the ECB’s deposit rate could be further reduced and after the reduction in late January remains higher than the upper limit of the range for the “neutral” interest rate.

The ECB does not precisely determine what is the neutral interest rate (which neither boosts nor burns growth), but a recent study (7 February) estimates between 1.75% and 2.25%. This means that there is still room for further reductions, as the deposit rate remains above this threshold.

Markets predict that the deposit rate will be further reduced to 2% by 2025. Similar estimates have also been expressed by members of the ECB’s Board of Directors, such as Giannis Stournaras and the François Vilua de Gallo.

What are the uncertainties for new reductions

However, from the April meeting, decision -making for new reductions is expected to become more difficult, as the ECB has to weigh the uncertainties.

Some officials such as Isabelle Snabelthey appear more skeptical, considering that the neutral interest rate may be higher than the past, due to increased demand for savings, green and digital transition and public debt growth.

In addition, energy costs and possible commercial implications of his policies Donald Trump They could reinforce inflation again, limiting the possibilities of further reductions.

In other words, no one can find that future reductions are given, as factors such as inflation, neutral interest rate and geopolitical developments will determine the course of monetary policy in the coming months