The European Central Bank (ECB) has lowered its main interest rate once more, this time by 0.25 percentage points, bringing it down to 2.25 percent. This marks the seventh rate cut since last summer, when the rate was at 4 percent.
The decision was made on Thursday and was widely expected by economists and markets. Most members of the ECB’s Governing Council supported the move, though not all. Austria’s central bank head, Robert Holzmann, did not vote. He is known for his cautious approach to lowering rates and was the only one to vote against the first rate cut in June 2024. It is unclear if he opposed this latest cut as well.
Economists believe more rate cuts are likely. A Bloomberg survey shows that 90 percent of experts expect the rate to fall to 2 percent by June. Market data supports this view, with a 70 percent chance of that happening.
The ECB’s decision is based on falling inflation in the eurozone. In March, consumer prices rose by just 2.2 percent, slightly down from 2.3 percent in February. The ECB aims to keep inflation close to 2 percent, which helps support stable growth and protect consumer buying power.
Meanwhile, in the United States, the Federal Reserve is not expected to cut interest rates soon. Its chair, Jerome Powell, says the main goal is to keep inflation under control. Speaking in Chicago, he said the Fed must make sure that short-term price increases don’t turn into long-term problems.
Currently, U.S. interest rates are between 4.25 and 4.50 percent. The next decision from the Fed is expected on May 7, but major changes are unlikely. For now, Europe is easing, while the U.S. stays cautious.
