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17.10.2024

ECB reduces its deposit facility rate by 25 basis points, as widely expected

The European Central Bank (ECB) lowered its deposit facility rate by 25 basis points to 3.25 per cent on Thursday, as widely expected. That marked the third straight rate reduction by the ECB this year.

In addition, the ECB’s interest rates on its main refinancing operations and marginal lending facility were cut by 25 basis points each to 3.40 per cent and to 3.65 per cent, respectively. Those decreases also matched markets’ forecasts. 

In its policy statement, the ECB noted:

- today's decision to lower the deposit facility rate is based on its updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission;

- Incoming information on inflation shows that the disinflationary process is well on track;

- Inflation outlook is also affected by recent downside surprises in indicators of economic activity;

- Financing conditions remain restrictive;

- Inflation is expected to rise in the coming months, before declining to 2% target in the course of next year;

- Domestic inflation remains high, as wages are still rising at an elevated pace;

- Labour cost pressures are set to continue easing gradually;

- Governing Council is determined to ensure that inflation returns to its 2% medium-term target in a timely manner;

- Governing Council  will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim;

- Governing Council will continue to follow a data-dependent and meeting-by-meeting approach to determining the appropriate level and duration of restriction;

- Governing Council is not pre-committing to a particular rate path;

- Governing Council stands ready to adjust all of its instruments within its mandate to ensure that inflation returns to its 2% target

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