European Central Bank Lowers Interest Rates, Fourth Cut In 2024

The European Central Bank on Thursday lowered the deposit rate by 25 basis points. The widely-anticipated move marks the ECB’s fourth interest rate cut of the year. 

The Details: The Governing Council lowered the interest rates on the deposit facility, the main refinancing operations and the marginal lending facility to 3.00%, 3.15% and 3.40% respectively. 

“Financing conditions are easing, as the Governing Council's recent interest rate cuts gradually make new borrowing less expensive for firms and households,” the ECB said in a press release. 

“But they continue to be tight because monetary policy remains restrictive and past interest rate hikes are still transmitting to the outstanding stock of credit.”

Read More: Inflation Rises As Expected In November, Sustains Hopes For December Interest Rate Cut

The ECB said its staff now expect a slower economic recovery than in its September projections, with survey indicators suggesting growth has slowed in the current quarter. 

ECB Staff now see the Eurozone economy growing by 0.7% in 2024, 1.1% in 2025, 1.4% in 2026 and 1.3% in 2027. 

The Governing Council said that it will follow a "data-dependent and meeting-by-meeting approach" as it remains determined to ensure inflation stabilizes at its 2% target. It also stressed that it is not committing to any particular rate path going forward. 

Markets React: European markets are steady on Thursday as traders assess the ECB’s interest rate cut. The pan-European Stoxx 600 index was down 0.06% at around 1:30 p.m. London time. Investors will be watching the Xtrackers MSCI Europe Hedged Equity ETF DBEU and the SPDR Portfolio Europe ETF SPEU to gauge the U.S. market reaction to the cuts. 

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