On 5 July, the ECB’s Governing Council took a decision to cut the key ECB interest rates by 0.25 each. The interest rate on the main refinancing operations of the Eurosystem has been decreased by 25 basis points to 0.75%, the interest rate on the marginal lending facility has been decreased by 25 basis points to 1.50% and the interest rate on the deposit facility has been decreased by 25 basis points to 0.00%, all with effect from 11 July 2012.

As economic growth remains weak and inflation higher, but close to 2%, lower interest rates are expected to encourage lending and thus boost the economy. This step was not a surprise as many high representatives of the ECB expressed their willingness to do so already earlier in June. Lower interest rates also relate to the European Council conclusions of 29 June that focus mainly on restoring growth and competitiveness.

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