ECB Lowers Interest Rates by 0.25% for the Seventh Consecutive Time

In its latest announcement, the European Central Bank (ECB) has cut interest rates by 25 basis points for the seventh consecutive time. The Governing Council of the ECB decided to reduce all three key interest rates to 2.25%, 2.40%, and 2.65%, respectively, effective from April 23, 2025. Additionally, the APP and PEPP bond purchases are being tapered off predictably as the Eurosystem no longer reinvests proceeds from maturing securities. This decision is based on updated assessments of inflation prospects, underlying inflation dynamics, and monetary policy transmission. The ECB reports that inflation is on a good path, with both headline and core inflation declining in March as analysts expected. Most indicators suggest inflation will stabilize around the medium-term target of 2%. Wage growth is slowing, and profits are absorbing part of the wage increase impact on inflation. Despite global disruptions, the Eurozone economy shows resilience, but trade tensions have worsened growth prospects. Increased uncertainty could reduce household and business confidence and lead to tighter financing conditions. The Governing Council remains committed to ensuring inflation stabilizes sustainably at its 2% medium-term target, adopting a data-driven approach meeting by meeting.