ECB reduction: key interest-what does that mean for your money?

ECB reduction: key interest-what does that mean for your money?

Laimgrubengasse 10, 1060 Wien, Österreich - On December 12, 2024, the ECB council made an important monetary policy decision: the interest rates of the European Central Bank (ECB) will be significantly reduced from December 18, 2024. The main refinancing interest rate is reduced from 3.03 % to 2.53 %, while the reference interest rate drops from 4.15 % to 3.65 %, such as ecb confirmed. The decision of the ECB Council reflects the need to reduce the financing costs for companies and households and to force the economic recovery that was restricted by previous interest rate increases.

consequences for the economy

The ECB expects the current monetary loosening to help stabilize the internal inflation, which is currently declining but remains high. The wages and prices in certain sectors are only slowly adapting to the previous increase in inflation. The Council has also determined that borrowing gradually decreased by better financing conditions, although monetary policy continues to have a restrictive effect. The economic recovery is slower than before, but rising real income and company investments are supposed to boost private consumption.

The ECB has made it clear that it will use all the necessary instruments to ensure that inflation is stabilized by the target value of 2 % and the monetary policy transmission works smoothly.