ECB Cuts Interest Rates for the 6th Consecutive Time – Upward Revision in Inflation Outlook

The European Central Bank (ECB) announced a 0.25% cut in interest rates, marking the 6th consecutive reduction. This is also the second rate cut within 2025. The central bank revised its inflation outlook upwards due to rising energy prices. Following this decision, the interest rates for deposit facility, main refinancing operations, and marginal lending facility will decrease to 2.50%, 2.65%, and 2.90%, respectively, effective from March 12, 2025. In its statement, the ECB noted that its monetary policy becomes ‘significantly less restrictive,’ leaving all options open for future moves. The ECB expects inflation to average 2.3% in 2025, 1.9% in 2026, and 2.0% in 2027. The upward revision for 2025 reflects stronger dynamics in energy prices. Excluding energy and food, experts predict inflation will average 2.2% in 2025, 2.0% in 2026, and 1.9% in 2027. Meanwhile, growth forecasts are slower than previously anticipated, projecting rates of 0.9% for 2025, 1.2% for 2026, and 1.3% for 2027. These downward revisions reflect lower exports and ongoing investment weakness partly due to trade policy uncertainty and broader political instability. Rising real incomes and gradually waning effects of previous rate hikes remain key factors supporting expected demand growth over time.