Decision of the interest rate of the European Central Bank, January 2025

A reduction in 50 base points was not on the table of the Board of Directors of the European Central Bank during its last interest rate decision, the president of the BCE Lagarde said on Thursday.

“I can reassure you right away, we did not even pronounce the two numbers five, zero. So 50 was not at all in the debate,” she told Annette Weisbach de CNBC during A press conference.

Lagarde noted that there was unanimous support from all members of the Board of Directors for a reduction of 25 basic points.

– Sophie Kiderlin

The president of the European Central Bank, Christine Lagarde, said Thursday that the economy of the euro zone “should remain small in the short term”.

His comment came after the data published earlier in the day showed that the economic growth of the euro zone clashes in the fourth quarter of 2024. Economists expected growth of 0.1%, after expansion 0.4% in the previous quarter.

In the declaration published Thursday by the ECB, the central bank also underlined the opposite winds for the economy.

“The economy is still faced with opposite winds, but the increase in real income and the effects that gradually discolor the restrictive monetary policy should support a request for time,” he said.

– Sophie Kiderlin

Other interest rate reductions are likely to come from the European Central Bank and will probably go further than investors are waiting for it, said Jack Allen-Reynolds, chief deputy chief of the euro area of ​​capital area on Thursday Economics.

“The ECB’s decision to reduce its deposit rate by 3% to 2.75% today is not surprising and the declaration which accompanies it implies that more reductions have come, as is widely planned. We Think that the bank will have to reduce interest rates further than most investors expect, “he said.

Although the declaration is similar to the last, “the general tone shows that political decision-makers are convinced that inflation will soon return to the target,” said Allen-Reynolds.

He also pointed out that the central bank reiterated that politics was still “restrictive”.

“Since political decision -makers no longer seem to think that interest rates must be restrictive, it is a fairly clear signal that they expect more interest rate reductions during upcoming meetings”, he said.

– Sophie Kiderlin

The European Central Bank said Thursday that disinflation “is indeed on the right track” and has greatly developed in accordance with staff projections.

Inflation should go back to the target of 2% this year, he said in a statement by announcing its last interest rate decision, noting that it was “determined” to guarantee that inflation is set to this level.

The ECB also reiterated that it would follow a meeting of a meeting dependent on the data of its political decision-making and that it was not pre-engaged at a certain rate path.

The inflation of the euro zone increased for the third consecutive month to 2.4% in December, after falling below the target of 2% of the ECB several months earlier

– Sophie Kiderlin

The European Central Bank said on Thursday that it reduced interest rates by 25 additional base points.

This is the reduction in the fifth rate since the ECB began to alleviate monetary policy in June 2024. This is the ease of deposit of the ECB, its key rate, to 2.75%.

– Sophie Kiderlin

The euro was slightly withdrew against large currencies before the decision of the European Central Bank.

At 11:50 a.m. London time, euro dropped by 0.24% compared to the dollar, to $ 1,039.

The euro was also down approximately 0.08% against the British pound.

Interest rate drops generally erod the support for a currency.

– Sophie Kiderlin

The return on the obligations of the euro zone governments slipped while investors considered the latest growth data and turned to the announcement of the interest rate of the European Central Bank.

GDP data for the fourth quarter of 2024 from France, Germany and the EURO area overall were lower than expected on Thursday.

In addition, the ECB should reduce interest rates by 25 base points later in the day.

The 10 -year -old German Bund yield was the last to decrease by more than 5 base points to 2.518%, while the 2 -year Bund yield was more than 5 base points less than 2.218%.

France’s bond yield at 10 years old, on the other hand, was negotiated for the last time at 3.263% after falling by more than 5 base points, and the 2 years Obligations yield has slipped more than 4 base points to 2.404%.

– Sophie Kiderlin

“A reduction is a case concluded,” Sphia Salim, head of research on European prices in Bofa Global Research, said on Thursday in CNBC.

This means that the changes in the declaration accompanying the announcement and the press conference that takes place afterwards will be the key, she said.

“We will look more at all potential changes in the declaration, but especially the press conference with in particular comments of the way the ECB examines the recent increase in energy prices … and also how they react to Uncertainty around prices, “Salim noted.

US President Donald Trump has repeatedly threatened that he will impose import prices in the United States from Europe.

The president of the European Central Bank, Christine Lagarde, told CNBC last week that Europe had to “be prepared” and anticipate potential commercial tasks.

She said that the fact that Trump had not imposed general prices on the first day of his presidency was a “very intelligent approach … because the general prices do not necessarily give you the results you expect”.

As such, she said that she expects Trump’s prices to be “more selective, concentrated”.

– Sophie Kiderlin

The German economy contracted 0.2% in the fourth quarter, the preliminary data from the German Statistics Agency Destatis showed on Thursday compared to a 0.1% withdrawal awaited by a Reuters survey.

The figure is adjusted for the price, the calendar and seasonal variations. During the previous quarter, Germany’s economy had increased by 0.1%.

Household and government consumer spending increased, but exports were “significantly lower” than in the previous quarter, Destatis said.

“After a year marked by economic and structural challenges, the German economy ended in 2024 in negative territory,” he added.

Read the full story here.

– Sophie Kiderlin

There will be many questions for the president of the European Central Bank Christine Lagarde in her press conference after cancellation Thursday – including the way the ECB considers her divergence of the American federal reserve, with regard to their cycles D ‘Flashing the respective monetary policy.

The ECB has so far reduced interest rates on four times, in a point percent point to percentage on each occasion. The bank should announce its fifth garnish Thursday, with pricing markets in three other versions throughout the year.

The Fed has reduced rates three times in 2024, including a greater reduction of 50 points. He left unchanged prices when his meeting ended on Wednesday, and fewer cuts are expected this year from the Fed compared to the ECB – probably only one or two.

Addressing CNBC last week, Lagarde recognized the divergence, pointing to different economic environments in the euro zone, compared to the United States

The euro zone was slow on the growth front, with certain key economies such as Germany and France in territory of stagnation. The American economy continued to grow at a solid pace.

– Sophie Kiderlin

The European Central Bank should largely launch its meetings in 2025 with another interest rate drop on Thursday, while merchants aim to assess how far the central bank is willing to diverge from a federal reserve in standby.

On Wednesday, the money markets were in that the central bank of the euro zone will reduce at least a quarter of percentage. This would take the deposit installation, its key rate, 2.75% marking its fifth garnish since it started to soften monetary policy in June 2024.

Read the complete CNBC overview of the BCE decision on Thursday here.

– Jenni Reid