Strategies of the European Central Bank 2025
The European Central Bank (ECB) has taken decisive steps in recent months to lower interest rates. These changes significantly affect borrowing costs for consumers and businesses.
Current Interest Rate Developments
- In April 2025, the ECB reduced the deposit interest rate by 25 basis points to 2.25 percent. Similar reductions were made to the main and marginal refinancing rates, signaling a loosening of monetary policy.
- A further reduction of the key interest rate occurred on June 5, 2025, from 2.25 percent to 2.00 percent.
- These measures are in the context of a positive disinflation process: inflation in the Eurozone was around 2.2 percent in March, close to the target of 2 percent.
Impacts on Consumers and the Economy
- The lowering of key interest rates leads to lower borrowing costs, which can stimulate investment and consumer spending.
- On the other hand, savers must contend with lower yields on savings deposits, as interest rates on fixed-income investments also move downward.
- For investors, altered yield prospects arise, with bonds potentially increasing in value due to falling interest rates.
Influence on Inflation
Contrary to your request, which assumes a current interest rate hike, it is evident that the ECB has preferred interest rate cuts in response to stable or slightly declining inflation. The ECB remains vigilant regarding future economic developments and makes its decisions on a meeting-by-meeting basis.
A potential increase in the key interest rate would depend on another rise in inflation or other economic risks. This could raise borrowing costs and offer savers higher returns.
Summary: The ECB is currently focused on lowering interest rates to support economic growth, while increases are not on the agenda at this time.