The European Central Bank cut its deposit facility rate by 25 basis points to 3.00% on 12 December 2024, delivering its fourth rate reduction of the year. The decision, taken at the ECB's final scheduled monetary policy meeting of 2024, was accompanied by a change to the Council's forward guidance.
The ECB removed its long-standing reference to keeping interest rates "sufficiently restrictive" for as long as necessary to return inflation to the 2% target. President Christine Lagarde and her colleagues declined to pre-commit to a specific pace or magnitude of future cuts.
STAFF PROJECTIONS REVISED DOWNWARD
Alongside the rate decision, the ECB published updated macroeconomic projections from its staff, which revised down both growth and inflation forecasts relative to the September round of estimates.
Staff now saw headline inflation averaging 2.4% in 2024, 2.1% in 2025 and 1.9% in 2026, with growth of 0.7% in 2024, 1.1% in 2025 and 1.4% in 2026. The ECB said it would follow a data-dependent and meeting-by-meeting approach and was not pre-committing to a particular rate path.
CUMULATIVE EASING REACHES 100 BASIS POINTS
The December cut brings the total reduction in the ECB's deposit rate over the course of 2024 to 100 basis points.
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