With the New Interest Rate Cut of the European Central Bank
With the new interest rate cut of the European Central Bank (ECB) on June 5, 2025, by 25 basis points to a deposit rate of 2.0%, a trend continues that has been observed since the beginning of the year. This development has immediate effects on the conditions for overnight and fixed-term deposit accounts in the euro area.
Impact on Overnight and Fixed-Term Deposit Rates
Direct Consequences for Savers
- Declining Interest Rates: Banks typically adjust their offers for overnight and fixed-term deposits in a timely manner in line with the ECB’s interest rate decisions. With each further cut in the key interest rate, the level of interest on deposits in these investment forms also decreases.
- Lower Returns: For savers, this means they will receive less interest income from their deposits in the future. Particularly affected are investors who have benefited from the higher interest rates in recent years.
- Changed Investment Strategies: Many savers will be forced to rethink their strategies and look for alternative investment forms with higher returns.
Background and Forecasts
Reasons for the Rate Cut: The ECB justifies its decision with subdued inflation – currently, an inflation rate of about 2% is forecast for 2025 – as well as stabilized economic growth. Both factors provide room for a loosening of monetary policy.
Further Development: Experts expect one more possible cut in July 2025, after which a pause could be taken. The scope for further significant cuts is considered limited.
Consequences for Savers and Investors
| Aspect | Impact from ECB Rate Cut |
|---|---|
| Overnight Deposit Rate | Falls promptly after key rate cut |
| Fixed-Term Deposit Rate | Also falls, usually with some delay |
| Alternative Investments | Demand increases (stocks, ETFs, etc.) |
| Liquidity | Greater willingness to invest outside conventional bank products |
Conclusion
The new interest rate cut by the ECB leads to further declines in both overnight and fixed-term deposit rates. For savers, this means lower yields from safe bank deposits. At the same time, the attractiveness of other asset classes like stocks or investment funds is increasing. The era of high deposit interest rates seems to be temporarily over; many experts anticipate that this low level will continue in the medium term or only be moderately adjusted.