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

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

Frankfurt am Main, Deutschland - On June 5, 2025, the ECB council decided to reduce the key interest rates by 25 basis points. This decision is made against the background of changed inflation prospects and the need to stabilize the monetary policy conditions. According to [ots] (https://www.ots.at/presseaus-sung/ots_20250605_OTS0178/Aenderung-des- and reference interest rate, the new interest rates will apply from June 11, 2025.

The new interest rates look as follows:

• main refinancing transactions: 2.15 percent
• Beak refinancing facility: 2.40 percent

In addition, the base rate is reduced from 2.03 percent to 1.53 percent, and the reference interest rate drops from 3.15 percent to 2.65 percent. These changes are carried out in accordance with Section 1 of the Euro-Justice Access Act and only apply if there has been a change in at least 0.50 percentage points since the last change.

Current economic framework conditions

The ECB Council decided on January 30, 2025, a reduction in the three key interest rates by 25 basis points each in order to counteract persistent high inflation. From February 5, 2025, the following interest rates were applied:

• Antzacility: 2.75 %
• main refinancing business: 2.90 %
• Top refinancing facility: 3.15 %

These decisions reflect an updated assessment of the prospects of inflation. The disinflation process shows progress, but inflation remains high due to delayed adjustments to wages and prices. The European Central Bank (ECB) strives to stabilize inflation at a target value of 2 %.

The economy is under pressure, but rising real income and declining monetary political restrictions could boost demand. Earlier interest rate cuts were perceived as helpful for companies and households, while the financing conditions are still restrictive.

outlook on monetary policy decisions

As early as December 2022, the ECB council decided to increase the three key interest rates by 50 basis points each in order to attribute inflation. These decisions are based on the ongoing data and show that the ECB is willing to adapt all available instruments to control inflation. Projection data showed an inflation of 10.0 % in November 2022, which led to a decline of 10.6 % in October. An inflation forecast of 2.3 % was created for 2025.

The ECB will continue to reduce the repayment amounts of the app (Asset Purchase Program) according to the planned time frames, of which the markets are also influenced. The decisions on monetary policy control are based on data and aim to avoid unwanted market dynamics, which is supported by the transmission protection instrument.

In the upcoming press conference, the ECB President will explain further details about these decisions at 2:45 p.m. CET. The observation of economic development remains crucial in order to adapt to monetary policy.