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The European Central Bank (ECB) announced on Thursday that it lowered key rates by 25 basis points (bps) following the January policy meeting, as expected. With this decision, the interest rate on the main refinancing operations, the interest rates on the marginal lending facility and the deposit facility stood at 2.9%, 3.15% and 2.75%, respectively.<\/p>\n
Developing story, please refresh the page for updates.<\/em><\/p>\n Please follow our Live Coverage here<\/a><\/em><\/strong><\/p>\n This section below was published as a preview of the European Central Bank’s policy announcements at 08:00 GMT.<\/em><\/p>\n The European Central Bank (ECB) interest rate decision will be announced on Thursday at 13:15 GMT following the conclusion of the January monetary policy meeting. Markets are anticipating another reduction in key rates, marking a continuation of the easing cycle after December\u2019s rate cut. No updated staff economic projections will published at this meeting.\u00a0<\/p>\n ECB<\/a> President Christine Lagarde will hold a press conference at 13:45 GMT, where she will deliver the prepared statement on monetary policy and respond to media questions. The ECB announcements will likely inject intense volatility around the Euro (EUR) against the US Dollar (USD).<\/p>\n After lowering key rates in December, the ECB is widely expected to announce another 25 basis points (bps) cut, taking the benchmark rate on deposit facility from 3% to 2.75%. It would be the fourth straight interest rates cut after trimming them in September, October and December 2024.<\/p>\n In December\u2019s post-policy meeting press conference, ECB President Christine Lagarde said that “risks to growth are tilted to the downside,\u201d while the \u201crisk to inflation is now two-sided.\u201d<\/p>\n Speaking on the inflation and interest rate outlook in a CNBC interview last week, on the sidelines of the World Economic Forum (WEF) annual meetings in Davos, President Lagarde said: \u201cWe’re confident Eurozone inflation will be at target over the course of 2025,\u201d adding that \u201cgradual moves in rates come to mind at the moment.\u201d<\/p>\n Eurostat\u2019s preliminary data released on January 7 showed that the Eurozone Harmonized Index of Consumer Prices (HICP) rose 2.4% year-over-year (YoY) in December after reporting a 2.2% increase in November. The data aligned with the market forecast. The annual core HICP inflation held steady at 2.7% in the same period.<\/p>\n Eurozone<\/a> inflation remained elevated and moved slightly from the central bank\u2019s 2.0% target in December. Economists at ABN Amro noted that \u201cthe rebound in headline inflation was driven largely by energy, with both the lower base from last year but also recent weakness in the Euro contributing to higher petrol prices, as well as higher gas and electricity prices with Europe running down its gas inventories somewhat faster than usual this winter. \u201c<\/p>\n Subsequently, the accounts of the December ECB meeting published on January 16 showed: \u201cThere were still many upside and downside risks to the inflation outlook. More check points had to be passed to ascertain whether disinflation remained on track and kept open the optionality to make adjustments along the way.\u201d<\/p>\n Against this backdrop, the ECB\u2019s communication in the policy statement and President Lagarde\u2019s comments will hold the key to determining the scope and timing of the next rate cuts as the Bank battles concerns over economic growth and potential tariffs by United States (US) President Donald Trump\u2019s administration.<\/p>\n Previewing the ECB meeting, TD Securities analysts said: \u201cThis decision should be a fairly straightforward cut. Inflation data has been noisy but on net a touch weaker than expected in its December projections. Growth signs show no real signs of improving, either, adding to the soft backdrop.\u201c \u201cWe expect no real change in messaging around this one, but questions about the neutral rate are likely to crop up in the press conference,\u201d the analysts added.<\/p>\n In the lead-up to the ECB showdown, the EUR\/USD pair<\/a> is hovering near last Friday’s five-week high of 1.0522. The pair\u2019s further upside remains dependent on the outlook of ECB interest rates<\/a>.<\/p>\n ECB President Christine Lagarde<\/a> is expected to maintain the rhetoric that the Bank is not on any pre-determined path on interest rates and will likely remain data-dependent. Lagarde could also reiterate her view of \u201cgradual moves in rates\u201d. In such a scenario, EUR\/USD is set to extend the recovery momentum. However, the main currency pair could witness a fresh downtrend if Lagarde mentions that a 50 bps rate cut was discussed as an option in the meeting or expresses concerns over the economic prospects.<\/p>\n Dhwani Mehta, Asian Session Lead Analyst at FXStreet<\/a>, offers a brief technical outlook for EUR\/USD:<\/p>\n \u201cDespite EUR\/USD\u2019s recent corrective decline, the pair remains poised for further recovery as the Relative Strength Index (RSI) indicator managed to defend the 50 level on the daily chart<\/a>. If buyers recapture the 50-day Simple Moving Average (SMA) at 1.0422 on a sustained basis, EUR\/USD could make another run toward the 1.0500 level. Further up, the six-week high of 1.0533 will be challenged.\u201d<\/p>\n \u201cIf the downside regains traction, the immediate support of the 21-day SMA at 1.0355 will be tested. A fresh sell-off could be seen below that level, opening doors toward the 1.0300 round level. The last line of defense for EUR\/USD buyers is seen at the January 17 low of 1.0265.\u201d<\/p>\n Following the European Central Bank\u2019s (ECB) economic policy decision, the ECB President<\/a> gives a press conference regarding monetary policy. The president\u2019s comments may influence the volatility of the Euro (EUR) and determine a short-term positive or negative trend. If the president adopts a hawkish tone it is considered bullish for the EUR, whereas if the tone is dovish the result is usually bearish for the Euro.<\/p>\n
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What to expect from the European Central Bank interest rate decision?<\/h2>\n
How could the ECB meeting impact EUR\/USD?<\/h2>\n
Economic Indicator<\/h2>\n
ECB Press Conference<\/h3>\n