PARIS (Reuters) – The European Central Bank (ECB) cut interest rates on Thursday for the fourth time since the start of the year and left the door open for further easing as inflation approaches its peak. objective and the economy remains weak.
The deposit rate thus increases to 3.0% after having climbed to 4% after ten consecutive increases between July 2022 and September 2023, its highest level since the creation of the euro in 1999.
The ECB opted for a first rate cut last June. It maintained the status quo in July before making a further reduction in September, then in October and December.
The Frankfurt institute indicated on Thursday that further reductions were possible and removed from its monetary policy statement the reference to maintaining “sufficiently restrictive” rates, which corresponds, in economic jargon, to a level of costs of borrowing that slows economic growth.
“Financing conditions are becoming more flexible as a result of the gradual reduction in the cost of new borrowing for businesses and households,” writes the ECB in its press release.
“But they remain strict, because monetary policy is still restrictive while the transmission of past increases in interest rates to outstanding loans continues,” continues the central bank.
There is no universal definition of what constitutes a restrictive rate, but economists generally consider that the “neutral” territory, that which neither fuels nor slows growth, is between 2% and 2.5%.
The ECB also confirmed on Thursday that it would stop buying bonds this month as part of its emergency purchase program put in place during the COVID-19 pandemic.
A survey earlier this month showed that 73 of 75 economists polled by Reuters expected a rate cut of 25 basis points, while the remaining two expected a reduction of half a point.
The President of the ECB, Christine Lagarde, is due to comment on the institution’s announcements during a press conference scheduled for 1:45 p.m. GMT.
(Written by Claude Chendjou, edited by Blandine Hénault)
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