On the 5th (local time), the European Central Bank (ECB) announced that it has lowered the policy interest rate by 0.25 percentage points.
On this day, the ECB held a monetary policy meeting in Frankfurt, Germany, reducing the interest rate on deposits from 2.25% to 2.00%, and the benchmark rate from 2.40% to 2.15%. The marginal lending rate was lowered from 2.65% to 2.40%. The ECB uses the interest rate on deposits as the basis for its monetary policy.
With this interest rate cut, the gap between the ECB's deposit interest rate and the benchmark rate of the Federal Reserve (Fed) of the United States (4.25% to 4.50%) has widened to 2.25 to 2.50 percentage points. The difference from the Bank of Korea's benchmark rate (2.50%) is 0.50 percentage points. Since shifting to a more accommodative monetary policy in June of last year, the ECB has cut the deposit interest rate from 4.00% to 2.00% over eight occasions.
The ECB has revised downward its inflation outlook for consumer prices in the eurozone, which comprises 20 countries using the euro, from the previous 2.3% to 2.0% for this year, and from 1.9% to 1.6% for next year. While it maintained the economic growth forecast for this year at 0.9%, the outlook for next year was lowered from 1.2% to 1.1%.