From Morningstar: 2024-09-12 10:10:00

The European Central Bank cut interest rates, deposit facility rate down 0.25 pts to 3.5%. Main refinancing rate and marginal lending facility rates also cut by 0.60 pts each. Decision was unanimous, growth outlook lowered, core inflation forecast raised, reason being slow, steady approach validated by data since June.

Spreads between rates reduced, key interest rates now main refinancing rate 3.65%, marginal lending facility rate 3.90%, deposit facility rate 3.50%. Shift towards data-dependent, meeting-by-meeting approach for future rate cuts. European stocks stable after expected move, euro initially strengthened.

ECB trims growth outlook slightly, hikes core inflation forecast. Headline inflation projections unchanged, core inflation revised up. Domestic inflation high, wages rising but moderating cost pressures. Economic growth projections adjusted downward for 2024-2026. ECB anticipates inflation fall towards target over next year.

ECB moves ahead of Fed’s expected rate cuts. Swiss National Bank and others made cuts earlier. Most analysts expect one more ECB rate cut by year-end. Continuing cycle of rate cuts likely in 2025, bringing interest rates down further. Expectation for rising stock markets, falling bond yields, lower cash savings rates, cheaper consumer debt.



Read more at Morningstar: ECB Cuts Rates as Expected, Trims Growth Outlook