The European Central Bank decided on Thursday, after the end of the January monetary policy meeting, to cut interest rates by 25 basis points to 2.90%. The key points in the monetary policy statement issued by the bank are as follows:
The European Central Bank has decided to lower its three main interest rates by 25 basis points. The deposit facility rate was reduced based on the updated assessment of inflation, core inflation dynamics, and the strength of monetary policy transmission. Inflation has noticeably slowed and is expected to return to the 2% target in the medium term by 2025. Core inflation measures indicate that inflation will stabilize at the target level. Domestic inflation remains high due to delayed adjustments in wages and prices in some sectors, but wage growth is moderate and profits offset the effects of inflation. The recent interest rate cuts are reducing borrowing costs for businesses and households, although financing conditions remain tight due to previous restrictive policies. The economy still faces challenges, but real income growth and the easing of the effects of monetary policy are expected to support demand recovery. The Governing Council will take a data-dependent approach at each meeting concerning monetary policy decisions, focusing on inflation, economic data, and policy transmission. The ECB has not committed to a specific path for interest rates
