Monetary policy statement issued by the European Central Bank - January 2025

The European Central Bank decided on Thursday, after the end of the January monetary policy meeting, to cut interest rates by 25 basis points to 2.90%. The key points in the monetary policy statement issued by the bank are as follows:

• The European Central Bank has decided to lower its three main interest rates by 25 basis points.
• The deposit facility rate was reduced based on the updated assessment of inflation, core inflation dynamics, and the strength of monetary policy transmission.
• Inflation has noticeably slowed and is expected to return to the 2% target in the medium term by 2025.
• Core inflation measures indicate that inflation will stabilize at the target level.
• Domestic inflation remains high due to delayed adjustments in wages and prices in some sectors, but wage growth is moderate and profits offset the effects of inflation.
• The recent interest rate cuts are reducing borrowing costs for businesses and households, although financing conditions remain tight due to previous restrictive policies.
• The economy still faces challenges, but real income growth and the easing of the effects of monetary policy are expected to support demand recovery.
• The Governing Council will take a data-dependent approach at each meeting concerning monetary policy decisions, focusing on inflation, economic data, and policy transmission.
• The ECB has not committed to a specific path for interest rates.

More to follow..