ECB says policy becoming 'meaningfully less restrictive'

(Sharecast News) - Rate-setters at the European Central Bank announced a further interest rate cut and said that monetary policy was becoming "meaningfully less restrictive". That statement appeared to indicate that monetary easing was set to slow to one degree or another.

Interest rates on the deposit facility, the main refinancing operations and the marginal lending facility would all be lowered to 2.50%, 2.65% and 2.90% respectively, with effect from 12 March 2025, the ECB said.

The ECB also released its latest staff projections for inflation and growth.

Consumer price inflation was now seen averaging 2.3%, 1.9% and 2.0% between 2025-27.

The forecast for 2025 had been revised up due to stronger energy prices.

Gross domestic product growth on the other hand was seen coming in lower in 2025 and 2026, at 0.9% and 1.2%, respectively.

"The downward revisions for 2025 and 2026 reflect lower exports and ongoing weakness in investment, in part originating from high trade policy uncertainty as well as broader policy uncertainty," the central bank said.

"Rising real incomes and the gradually fading effects of past rate hikes remain the key drivers underpinning the expected pick-up in demand over time."

But it was not clear what the underlying assumptions were for US foreign trade policy or to what extent higher euro area defence spending had been factored in.

ECB president Christine Lagarde's press conference was scheduled to begin at 1345 BST.