European Central Bank Reduces Key Interest Rate to 2.5%

The sixth consecutive rate cut since summer 2024 aims to support economic growth but raises concerns about inflation and savings returns.

The European Central Bank (ECB) cut the deposit rate by 0.25 percentage points to 2.5%, marking its sixth reduction since mid-2024.
The move is intended to stimulate the sluggish eurozone economy by making borrowing cheaper for businesses and households.
Savings returns continue to decline, with average German day-to-day savings rates dropping to 1.48% in February, the steepest monthly fall since 2012.
ECB officials remain divided on future rate cuts, with some cautioning against further action due to potential inflation risks and geopolitical uncertainties, including U.S. trade policies.
While inflation in the eurozone has eased significantly from its 2022 peak, it stood at 2.4% in February, slightly above the ECB's target of 2%.