The decision today results in a 25 basis point reduction in the three key rates set by the ECB. The adjustment in the deposit facility rate comes after a comprehensive assessment of the inflation outlook, potential dynamics of inflation, and the effectiveness of monetary policy transmission. This rate serves as a pivotal tool for managing the stance of monetary policy.

The process of inflation abatement is advancing steadily. Analysts predict that the overall inflation rate for 2024 will average 2.4%, reducing to 2.1% in 2025 and further to 1.9% in 2026, with an anticipated increase to 2.1% in 2027 interconnected with the expansion of the EU Emission Trading System. When excluding energy and food costs, inflation is expected to average 2.9% in 2024, 2.3% in 2025, and remain at 1.9% for both 2026 and 2027.

The majority of underlying inflation indicators indicate that inflation will sustainably stabilize around the set medium-term target of 2%. Although inflation has decreased, it remains elevated, primarily due to certain sectors where wage and price adjustments lag behind the impact of previous inflation surges.

With recent rate cuts gradually reducing the new borrowing costs for businesses and households, financing conditions are beginning to ease.Nevertheless, due to ongoing restrictive monetary policy and the residual effects of prior rate hikes still transferring into existing credit volumes, financing conditions continue to remain tight.

Current projections indicate that economic recovery will proceed at a slower pace than previously predicted in September. Despite a rebound in economic growth during the third quarter of this year, survey indicators suggest a slowdown in growth for the current quarter. Economic growth is expected to reach 0.7% in 2024, 1.1% in 2025, 1.4% in 2026, and 1.3% in 2027. This recovery is primarily driven by growth in real income, which should enhance household spending capacity as businesses ramp up investments. As the stringent monetary policy effects gradually wane, recovery in demand will receive additional support.

The ECB is committed to ensuring that inflation remains sustainably stable at the 2% target level in the medium term. The appropriate stance of monetary policy will be determined based on a data-dependent and meeting-by-meeting approach, particularly where rate decisions will hinge on the inflation outlook, the latest economic and financial data, potential inflation dynamics, and the effectiveness of monetary policy transmission. There will be no prior commitment to any specific path for interest rates.

The ECB has decided to lower the three key rates by 25 basis points

• Haiputun's Rise: From Disruptor to Leader
• Financial Transformation, Risks, and Responses in the Digital Era
• Evolution and Key Traits of the Japanese Real Estate Market
• Accelerated Launch of REITs Products
• Can America's 'New Economic Policy' Succeed?

Effective December 18, 2024, the deposit facility rate, the main refinancing rate, and the marginal lending rate will be reduced to 3.00%, 3.15%, and 3.40% respectively.

The Asset Purchase Program (APP) portfolio is being reduced at a manageable and predictable pace, with no reinvestment of principal on maturing securities in the euro area.

The Eurozone has ceased the full reinvestment of principal on maturing securities under the Pandemic Emergency Purchase Programme (PEPP), reducing the PEPP portfolio by an average of €7.5 billion per month.Reinvestment of PEPP is expected to conclude by the end of 2024.

Banks will repay the remaining borrowings under the targeted long-term refinancing operations this month, completing this component of the balance sheet normalization process.

The ECB remains poised to adjust all available tools within its authority to ensure that inflation is sustainably stabilized at the 2% target level in the medium term and to maintain the smooth operation of monetary policy transmission