The first interest rate cut by the ECB in five years appears imminent, according to meeting documents from European central bankers. If European inflation continues on its path towards 2 percent, the interest rate could be lowered in June.
Minutes from the ECB’s latest interest rate meeting in April were made public on Friday. This board comprises central bankers from all eurozone countries. In April, following that meeting, the ECB kept the interest rate unchanged at 4 percent, its highest level ever.
The ECB interest rate is crucial as it affects lending and saving rates at European banks. Lower rates mean cheaper borrowing, while savings rates may not rise further.
Preceding the latest interest rate decision, meeting documents indicated that it’s likely the board could decide on a rate cut in June, especially if European inflation continues to decline towards 2 percent by 2025.
Notably, some members of the ECB board were already in favor of a rate cut in April, although it didn’t materialize then. Economists, analysts, and investors have been anticipating this move for some time, expecting it to happen in June. However, whether the ECB will indeed take this step remains uncertain.