The European Central Bank on Thursday lowered interest rates for the fifth time in a row, bringing its key deposit rate down a quarter point to 2.5 percent.
The ECB said in a statement that its rates had become “meaningfully less restrictive“, easing the pressure on households and businesses in the eurozone.
The fight against inflation was proceeding well, the Frankfurt-based bank said.
Cutting rates helps to boost the weak eurozone economy by lowering the costs of borrowing.
The deposit rate, which credit institutions receive when they park money at the bank, is relevant for savers: If banks receive less interest from the ECB on their deposits, they reduce interest rates for customers.
The ECB also lowered its key refinancing rate, which provides liquidity to the banking system, to 2.65%, down from 2.9%.
Economists expect the ECB to lower the deposit rate further by the middle of the year. This is because trade disputes with the US could put additional pressure on the eurozone economy, which is unlikely to grow this year, according to the latest ECB forecast.
Another reason for further interest rate cuts is that the central bank sees its goal of stable prices within reach, aiming for medium-term inflation of 2%.
Inflation had previously skyrocketed after the coronavirus pandemic and Russia’s invasion of Ukraine in 2022, which forced up energy prices.