ECB cuts interest rate to 3.5% as expected

European Central Bank (ECB) headquarters

The European Central Bank (ECB) cut the benchmark interest rate by 25 basis points, meeting expectations. This move aligns with recent inflation data and policymakers' estimates.

In its statement today, Sept. 12, the ECB said the deposit facility rate will drop to 3.5%, effective as of Sept. 18.

The ECB noted that after evaluating inflation outlook, core inflation, and monetary policy transmission, the timing was right to further ease monetary tightening.

It added that domestic inflation remains high with steady wage increases, but labor cost pressures are slowing. Lower corporate profits are helping offset the impact of rising wages.

The ECB's decision followed a previous meeting where rates were left unchanged, and a similar cut in June, the first to ease borrowing costs in the Eurozone since the tightening cycle began.