The European Central Bank (ECB) has lowered the main deposit rate to 3.25% from 3.50%, marking the bank’s first back-to-back rate cut in 13 years.
In addition, the main ECB refinancing rate also fell to 3.4% from 3.65%.
This came in response to revised annual inflation figures for the Euro Area, which came in at 1.7% in September, down from 1.8%.
Lindsay James, investment strategist at Quilter Investors, said: “With inflation now sitting well below the ECB’s target and economic growth still sluggish, markets had been expecting the Bank would continue on its path of rate cuts.
“At the last ECB monetary policy meeting, officials signalled that the third rate cut would be unlikely to come until December.
“Since then, however, the data has shown the economy has weakened further, and this has clearly had an impact on their decision making.”
James added: “The economy is in desperate need of stimulus, and the ECB will be hoping this third rate cut will begin to make a difference.
“Today’s news will at the very least bring some relief to consumers and businesses which could boost confidence and subsequently help towards the economic recovery.
“Looking ahead, the ECB will be keeping an extremely close eye on the data that comes out before its December meeting.
“It will be pleased that inflation has finally come in lower than target, but keeping the economy afloat will be its next challenge.”
