ECB announces second interest rate cut of this year
European Central Bank President Christine Lagarde reacts as she speaks to reporters following the Governing Council's monetary policy meeting in Frankfurt, Germany September 12.
The European Central Bank on Thursday announced it would cut key interest rates again, marking its second rate reduction this year following a move in June, with no indication of the future rate path.
In a press release, the ECB announced that it has decided to reduce the deposit facility rate by 25 basis points to 3.5 percent due to declining inflation. This decision follows the bank's June rate cut, which marked its first reduction in five years.
The market expects this move would further ease financing conditions for households and businesses in the eurozone.
"Based on the Governing Council's updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission, it is now appropriate to take another step in moderating the degree of monetary policy restriction," the bank said.
According to the spread established by the ECB between the three key interest rates, the rates for the main refinancing operations and the marginal lending facility will be reduced to 3.65 percent and 3.90 percent, respectively, following the cut to the deposit facility rate.
