On the 17th (local time), the European Central Bank (ECB) lowered its policy interest rate to 2.25%, a decrease of 0.25 percentage points. This marks the sixth consecutive rate cut.
On the same day, the ECB held a monetary policy meeting in Frankfurt, Germany, and reduced the interest rate on deposits from 2.50% to 2.25% and the benchmark interest rate from 2.65% to 2.40%. The marginal lending rate was also lowered from 2.90% to 2.65%.
Since the ECB shifted its monetary policy direction last June, it has cut the policy interest rate six times in total from September of the same year to the present.
As a result of this cut, the gap between the ECB's benchmark interest rate for deposits and the U.S. Federal Reserve (Fed) benchmark interest rate (4.25% to 4.50%) has widened to 2.00 to 2.25 percentage points.
The ECB deposit rate has reached the upper end of the neutral interest rate range estimated by the ECB, which is 1.75% to 2.25%. The neutral interest rate refers to a level of policy interest rate that does not trigger either inflation (rising prices) or deflation (falling prices during an economic downturn).