The European Central Bank on Thursday decided to cut its key interest rate, citing the inflation outlook for the Eurozone.
The ECB will lower its deposit facility rate by a quarter of a percentage point to 3.5 percent. The move follows a rate cut in June, which was the first by the bank in 4 years and 9 months.
The latest cut follows consumer price growth of 2.2 percent in August from the prior year. That’s the slowest pace in about 3 years in the Eurozone.
A statement by the ECB says, “economic activity is still subdued, reflecting weak private consumption and investment.”
The statement says the bank will remain focused on data in assessing the appropriate interest rate for the economy.
European Central Bank President, Christine Lagarde, said: “In particular, our interest rate decisions will be based on our assessment of the inflation outlook in light of the incoming economic and financial data … We are not pre-committing to a particular rate path.”
Lagarde says the ECB’s latest projections confirm the inflation outlook made in June. It sees headline inflation averaging 2.5 percent in 2024 and 2.2 percent next year.