The European Central Bank has cut interest rates for the second consecutive month and for the third time this year. This is also the first time in 13 years that the ECB enacted back-to-back rate cuts.
The ECB’s Governing Council lowered its three key interest rates by 25 basis points – the interest rates on the deposit facility, the main refinancing operations and the marginal lending facility will be decreased to 3.25%, 3.40% and 3.65% respectively, with effect from Oct. 23.
However, the Governing Council’s announcement included the caveat that it was “not pre-committing to a particular rate path.”
“We believe the disinflationary process is well on track and all the information we received in the last five weeks were heading in the same direction – lower,” said ECB President Christine Lagarde at a press conference. While Lagarde acknowledged “recent downside surprises” on economic activity, she added, “We certainly do not see a recession. We are still looking at that soft landing.”
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