ECB cuts key interest rates for the second time since the beginning of the year

On March 6, the European Central Bank (ECB) again cut all three key interest rates by 25 basis points. This is stated in the regulator’s report.

Starting March 12, the base rate on deposits will be 2.5%, the rate on main refinancing operations will be 2.65%, and the rate on margin loans will be 2.9%.

According to the ECB, the process of disinflation is proceeding properly. Inflation, in general, continues to develop in line with the regulator’s expectations, and the latest forecasts for it closely coincide with the previous ones.

The European Central Bank currently forecasts that headline inflation will average 2.3% this year, 1.9% in 2026, and 2% in 2027. The upward revision of expectations for 2025 reflects the stronger dynamics of energy prices.

The regulator also predicts economic growth in the eurozone by 0.9% in 2025, 1.2% – in 2026 and 1.3% – in 2027. As noted, the deterioration in expectations for 2025 and 2026 reflects a decline in exports and continued weakness in investment, partly due to high trade policy uncertainty, as well as broader political uncertainty.

Growth in real household incomes and the gradual weakening of the impact of previous rate hikes remain key factors underpinning the expected recovery in demand over time.

As GMK Center reported earlier, inflation in the euro area fell to 2.4% year-on-year in February 2025, according to preliminary Eurostat data. In January, this figure was +2.5% y/y.