European Central Bank cuts interest rates by 25 basis points

The European Central Bank (ECB) has slashed its benchmark interest rate by 25 basis points, bringing it lower from 2.90% to 2.65%, along with reducing the deposit facility rate to 2.50% and the marginal lending rate to 2.90%.

The move aims to stimulate economic growth amid persistent inflation and slow recovery in the Eurozone amid a looming trade war as US President Donald Trump pushes tariffs against all major economies.

With 25 bps cut, ECB’s deposit facility rate (overnight interest rate on bank deposits) is now down to 2.50% from 2.75%. Likewise, ECB’s marginal lending rate (overnight borrowing interest rate) now stands at 2.90% from the previous 3.15%.

Implications of ECB decision  

The decision to cut interest rates comes amid rising concerns over slowing economic growth in the Eurozone, higher inflation, and lingering global uncertainties. By reducing interest rates, the ECB hopes to inject more liquidity into the economy, making borrowing cheaper for businesses and households. The move is likely designed to encourage investment and consumer spending, which have both been tepid in recent months.