When does the current interest reduction cycle end? (Photo: Freepik, User31875352)
Frankfurt am Main – for a while “Falken” and “Tauben” – representatives of a strict and a relaxed monetary policy – marched hand in hand at the European Central Bank. The signs were on interest reduction. Is that over soon? Today the ECB council announces its interest rate decision (2:15 p.m. CET).
The 26 members of the committee will once again reduce interest rates, there are little doubt about experts and markets. Loud Data from London Stock Exchange Group (LSEG) is the likelihood of a further interest cut by 25 basis points at a whopping 96 percent.
Current interest rates in the euro zone – Consumer prices February 2025
The euro currency keepers have reduced interest rates 5 times since June 2024. After the last decision At the end of January, the deposit rate important for savers and loans was 2.75 percent. The main refinancing rate with which banks borrow money from the ECB is 2.90 and the top -refinancing rate is 3.15 percent.
The interest drops because the inflation towards 2 percent goal is moving. In February If the inflation is a bit dilated again, by 0.1 to 2.4 percent in the annual comparison – 2.3 percent were expected. The core inflation without energy, food and luxury food has dropped by 0.1 to 2.6 percent.
Problem service inflation – Schnabel: Discussion about break
Which is good: one of the largest price drivers lost dynamics. In February, costs for services only rose by 3.7 percent – in the previous months the service management inflation in the euro area was 3.9 to 4 percent. Behind it are high wage growth, which are now weakening.
Trump’s threatened tariffs are a risk for Europe, but probably more for growth. The Institute for the World Economy (Kiel) calculated that the European economy could shrink by 25 percent surcharge for exports (cars and more) by 0.4 percent within a year.
To date, the ECB course has been quite clear-but with a view to the April meeting there is dissent. ECB directorate member Isabel Schnabel For example, “about a break or a stop of the interest reductions” wants to talk. But also the reduction in reduction (“pigeons”) bring up.
Forecast: ECB session in April-Interest development by the end of 2025
An interest break from the ECB on April 17th is conceivable if the inflation decline and positive economic data were added, for example, mine Goldman Sachs economists. However, many experts see the prices on the right track and expect less growth than expected.
In a Bloomberg survey After all, 25 percent of the analysts expect an interest break in April. Is on the markets The quota for this 40 percent. By the end of the year, the dealers have priced in an interest rate decline by 80 basis points, i.e. at least 3 more steps of 0.25 percent.