The interest rates in the Eurozone have been lowered for the third time this year.
The European Central Bank (ECB) has reduced its base deposit rate from 3.5% to 3.25% today.
The ECB’s Governing Council voted again to reduce borrowing costs after inflation fell below its 2% target last month, registering at just 1.7%, as reported by The Guardian.
In announcing the decision, the ECB stated: “The decision to lower the deposit facility rate—the rate through which the Governing Council steers the monetary policy stance—was based on an updated assessment of the inflation outlook, the dynamics of core inflation, and the transmission strength of monetary policy.”
The deposit rate determines the payment of returns for Eurozone banks when they make overnight deposits in the Eurosystem.
The ECB also predicted that inflation would rise in the coming months before falling back to its 2% target next year.
“Inflation is expected to rise in the coming months before dropping to target during the next year. Domestic inflation remains high as wages continue to increase at a rapid pace.”
