The seventh consecutive reduction in interest rate Its European Central Bank (17.4.2025) announced today (17.4.2025)ECB).
As stated in the announcement, the ECB’s Board of Directors has decided to reduce the ECB’s three main interest rates by 25 basis points. Consequently, the interest rates of facilitating acceptance of deposits, main refinancing operations and marginal funding facilitation will be reduced to 2.25%, 2.40% and 2.65% Correspondingly, with validity from April 23, 2025.
In addition, it is added that the PEPP and PEPP portfolios are reduced at a measured and predictable rate, as the Eurosystem is no longer reinforced the amounts of capital from the payment of securities at the end.
The ECB’s decision to reduce the interest rate on the acceptance facilitation is based on its updated evaluation of inflation prospects, the dynamics of underlying inflation and the intensity with which monetary policy is transmitted.
«Download risks to economic growth have increased“, Lagarde told reporters today in Frankfurt, stressing that it would still take time for the full consequences of US duties to be clear. “The significant escalation of global commercial tensions and related uncertainties will probably reduce the growth of the eurozone Through the weakening of exports and can capture investment and consumption, “Ms Lagarde said. “Climate deterioration in financial markets could lead to stricter funding conditions».
German bonds deleted losses, with the 10 -year bond yield to slightly drop to 2.5%. The euro expanded its previous decline, falling up to 0.6% to $ 1.336. Markets now provide three more deposit rate reductions before the end of the year.
‘The forward -looking view of the economy indicates an expected shock from duties And the characterization of “extraordinary” uncertainty indicates an opening to further monetary relaxation – provided that commercial shock remains and is confirmed by data, “said Mark Wall, head of European economist Deutsche Bank.
«We continue to expect another interest rate decrease in June and a 1.5% final rate by the end of the year” Just a few weeks ago thought of a cessation of the relaxation campaign, the announcement this month by President Donald Trump Drawings on the US Trade Partners raised support within the ECB towards a further reduction.
The prospect of a new movement became more attractive to policy makers as inflation continued to retreat to the ECB’s 2% target and was reinforced by the drop in energy costs and the decline in confidence indicators. Meanwhile, the unexpected rise of the euro has raised the common currency to a three -year high against the dollar.
“The climate of investors has proven to be more resistant to the Eurozone than in other economies,” Lagarde said, reiterating that the ECB is not aimed at a specific exchange rate.
The ECB’s new wording shows that officials now believe that politics is within the range of neutral policy estimates – a level that neither stimulates or limit economic activity. It remains unclear if they consider it necessary to reduce the cost of borrowing beyond this land.
With inflation already in recession, the fear now is that US duties will erase hopes for revitalizing the economy of 20 eurozone countries – possibly driving rising consumer prices below the target.
Despite Trump’s retreat, European Union products face 10% duties for 90 days, with no fixed indication of what will happen after it. His confrontation with China, meanwhile, has taken on dimensions – increasing the risk of some of its products being diverted to Europe at reduced prices.
The US Federal Bank (Fed) is in a more difficult position and may be forced to stay waiting until there is more clarity. President Gerom Powell warned Wednesday (16.4.2025) that the weakening of the economy and increased inflation could conflict its double goals, namely prices stability and the maximum possible employment.
On the side of Jerome Powell, Christine Lagarde
Christine Lagarde expressed her solidarity with Jerome Powell, who has been targeted by Donald Trump for Fed’s monetary policy.
“I have great respect for my honorable colleague,” Jerome Powell, Lagarde told reporters. “We have a strong and stable relationship between central banks (…) which is vital to the existence of a stable financial infrastructure that guarantees financial stability,” he added.
Earlier today, Trump was reunited against the Fed Presidentfor which he said he was “very slow” in reducing interest rates. “It is more than time for Powell to end,” Trump wrote on Truth Social, while Powell’s second term as head of the Fed is due to be completed in May 2026.
The Republican leader had already called on Powell on April 4 to reduce interest rates, then considering that it would be “the perfect time” for that. The Fed has maintained from the beginning of the year steadily the main interest rates between 4.25% and 4.50%.
Yesterday Powell predicted higher inflation and a slowdown in economic growth due to President Trump’s commercial policy.
The US president has occasionally threatened to try to dismiss Powell. At an event at the Chicago Economic Club, the latter said that Fed’s independence “is widely understood and supported in Washington and Congress where it really matters.”