On June 5, 2025, the European Central Bank (ECB) lowered interest rates again, dampening hopes for high yields on overnight and fixed deposit investments. This decision has far-reaching implications for investors and savers.
Background of the Interest Rate Cut
The three key interest rates were each cut by 25 basis points. The deposit rate now stands at 2.00%, the rate for the main refinancing operations at 2.15%, and the rate for the marginal lending facility at 2.40% effective June 11, 2025. This decision marks the fourth interest rate cut this year, signaling a clear departure from the previously inflationary monetary policy.
Impact on Overnight and Fixed Deposit Rates
The reduction in key interest rates directly affects the interest rates for overnight and fixed deposit accounts. Banks adjust their deposit rates, leading to lower returns for savers. Investors who rely on fixed income must adapt to these changed conditions.
Forecasts and Further Developments
Economic experts speculate about a possible further interest rate cut in July 2025. However, the easing of inflation and stabilized economic growth could argue against additional loosening. Therefore, the ECB may adopt a wait-and-see approach.
Outlook for Investors and Savers
Investors need to consider alternative investment forms, as high interest rates for overnight and fixed deposit accounts may be temporarily a thing of the past. Upcoming ECB meetings, especially in July and September, could set new monetary policy directions.