The European Central Bank cut its interest rate by 25 basis points at a meeting on January 30, marking the fifth reduction since the start of the policy easing cycle. The deposit rate is now 2.75%, the base rate is 2.9%, and the marginal loan rate is 3.15%. The market expected such a decision: experts predicted a rate cut to 2.75%. However, despite this, ECB President Christine Lagarde did not commit to further policy easing. At the same time, some council members admit the possibility of a new reduction in March. Economists believe that the ECB will cut rates at all four meetings until June, but traders predict three cuts in the first half of the year, possibly with a pause in April. They also estimate the probability of a new decline by the end of the year at 70%. December inflation was 2.4%, but it will take time to reach the 2% target. Slowing wage growth, lower oil prices, and a stabilizing dollar are easing the situation. The pressure on the cost of services remains high, but this is more an argument for gradual rather than drastic policy easing. It is likely that in 2025, the ECB may resort to four more rate cuts to support the economy against the backdrop of a recession in industry and weak consumer demand.
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