MNI BRIEF: ECB Cuts Deposit Rate 25Bp To 3.5%

MNI (LONDON) - The European Central Bank cut its key benchmark deposit rate by 25 bps to 3.5% on Thursday, saying the Governing Council’s updated assessment of the inflation outlook justified further moderation of the degree of monetary policy restriction (See MNI ECB WATCH: ECB To Cut 25BP, Stick To Data-Dependency)

The ECB also confirmed the deposit facility as the benchmark rate and tightened the spreads for the main lending rates, with the Main Refinancing Operation and the Marginal Lending Facility now priced at 15 and 40bps over DFR, changes first laid out in the March operation framework review. (See MNI: ECB Rate Shift Gives Added Focus To Deposit Facility Rate)

The ECB left its projections for coming months little changed, with inflation still seen at target sustainably by the second half of 2025. (see MNI SOURCES: ECB To Avoid Clear Rate Path, Sept Cut Baked In)