Currently 2.75 percent

Key interest rates are still slowing down the economy

The ECB still has to cut interest rates twice by 0.25 percentage points to achieve a neutral interest rate.

(Bild: AFP)

Borrowers beware: According to experts at the European Central Bank (ECB), the ECB will have to cut interest rates even further in order not to slow down the economy.

The economists estimate that the ECB will have to reduce its key interest rate twice by 0.25 percentage points each time until the upper end of the neutral interest rate range is reached. According to new calculations by ECB experts, the neutral interest rate is between 1.75 and 2.25 percent.

The neutral interest rate is a theoretical value at which the economy neither heats up nor cools down and inflation remains stable. The neutral interest rate cannot be measured directly; experts estimate it with the help of calculations. It is not a yardstick for an appropriate monetary policy course.

Lagarde announces further interest rate cuts
The key interest rate in the eurozone currently stands at 2.75 percent. The ECB only reduced the key interest rate at the end of January - for the fifth time since June 2024. ECB President Christine Lagarde said in a press conference that the ECB would continue its downward course.

Borrowers can be happy about this: when interest rates fall, banks can borrow money from the ECB more cheaply. The banks often pass these savings on to their customers. This makes loans cheaper.