ECB Lowers Main Refinancing Rate on June 5, 2025
ECB Lowers Main Refinancing Rate on June 5, 2025
The European Central Bank (ECB) announced a significant monetary policy update today, June 5, 2025, at 14:15 CEST, setting the main refinancing rate at 2.15%. This adjustment, detailed in the ECB’s latest policy statement, reflects ongoing efforts to navigate the Eurozone’s economic landscape amid moderating inflation and sluggish growth. Alongside this, the deposit facility rate reached 2.00%, and the marginal lending facility rate was set at 2.40%, both effective from June 11, 2025. The decision, widely anticipated by market analysts, underscores the ECB’s cautious approach to supporting economic recovery while maintaining price stability.
The announcement, made following the ECB’s Governing Council meeting in Frankfurt, comes as the Eurozone grapples with inflation hovering around 2.3% in early 2025, slightly above the ECB’s 2% target. The ECB’s statement emphasized that the disinflation process remains on track, with projections suggesting headline inflation will settle at 2.0% by late 2025. Economic growth, however, remains a concern, with ECB staff forecasting a modest 0.9% GDP growth for 2025, driven by weaker exports and cautious investment due to global trade uncertainties. The ECB highlighted that today’s rate adjustment aims to ease borrowing costs for banks, potentially stimulating lending and investment across the 20-nation Eurozone.
Market reactions were mixed, with some investors optimistic about cheaper borrowing fueling consumer spending and business activity, while others expressed concerns over persistent service sector inflation and wage pressures. The ECB’s data-dependent approach was reiterated, with President Christine Lagarde expected to elaborate on the decision during a press conference at 14:45 CEST today. Analysts note that the ECB’s move aligns with global trends, as other central banks also adjust policies to balance growth and inflation. This latest rate decision marks a pivotal moment for the Eurozone, with businesses and households closely watching for signals of further monetary easing in 2025.
