BREAKING: ECB trims interest rate in line with forecasts 💡

Eurozone - Interest rate decision (Refinancing) for June:

• Actual: 2.15%; Forecast: 2.15%; previous: 2.40%; (in progress)

• ECB cuts rates for eighth time, widening gap with FED

• Traders increase ECB rate-cut bets, now anticipating 33bps more this year; this dovish outlook could depreciate the EUR against the USD in the medium term, all else being equal in terms of tariffs etc. 

What are the key comments included in the decision report?

• ECB determined to ensure that inflation stabilises sustainably at its 2% medium-term target
• THE baseline of new Eurosystem staff projections, headline inflation is set to average 2.0% in 2025, 1.6% in 2026, and 2.0% in 2027
• Staff expect inflation excluding energy and food to average 2.4% in 2025 and 1.9% in 2026 and 2027, broadly unchanged since March
• While uncertainty surrounding trade policies is expected to weigh on business investment and exports, especially in the short term, rising government investment in defence and infrastructure will increasingly support growth
• Staff see real GDP growth averaging 0.9% in 2025, 1.1% in 2026, and 1.3% in 2027
• Concerns that increased uncertainty and a volatile market response to trade tensions in April would have a tightening impact on financing conditions have eased
• Especially in current conditions of exceptional uncertainty, we will follow a data-dependent and meeting-by-meeting approach to determining appropriate monetary policy stance.

The EUR/USD pair did not react to the ECB decision, which was in line with market expectations. Source: xStation