ECB cuts interest rates: loans will become cheaper, deposits will become less profitable
The European Central Bank (ECB) has decided to cut interest rates by 0.25 percentage points, bringing them to their lowest level in the last two years. Starting from February 5th, the deposit rate will be 2.75%, the main loan rate will be 2.90%, and the margin rate will be 3.15%
What does this mean for consumers?
Cheaper loans – lower interest rates can lead to lower payments on mortgages and other floating-rate loans. Also, the terms of new loans may become more attractive.
Less profitable deposits – banks are likely to revise savings rates, reducing the profitability of deposits.
Economic incentive – cheaper loans can boost consumption and investment, which will support economic growth. However, it can contribute to the risk of acceleration of inflation.