❗️ 📝Cable FX Macro Weekly Note: ECB April Rate Decision

**As seen in Risk In The Week report 04/15/25, get access now! cablefxm.co.uk

The ECB announced its latest interest rate decision on March 6, cutting its key interest rate by 25bps. The deposit facility rate, which steers the ECB’s monetary policy stance, was lowered from 2.75% to 2.50%, the main refinancing operations rate to 2.65%, and the marginal lending facility rate to 2.90%, effective March 12, 2025. This marks the sixth rate cut since June 2024, reflecting the ECB’s response to slowing inflation and economic challenges in the eurozone. The governing council noted the disinflation process is on track, with headline inflation projected at 2.3% in 2025, 1.9% in 2026, and 2.0% in 2027. Core inflation (excluding energy and food) is expected to average 2.2% in 2025, 2.0% in 2026, and 1.9% in 2027. The ECB noted that monetary policy is becoming “meaningfully less restrictive,” a shift from its prior “restrictive” stance, signaling a hawkish tilt despite the cut. This change suggests caution about further easing due to uncertainties like potential trade wars and increased defense spending.

Analysts at ING warned that the Governing Council may highlight rates are now close to neutral, but that doesn’t rule out further tariff-led cuts. ING thinks the ECB will keep its options open, and markets should continue to lean on the dovish side of pricing. Finally, ING said the ECB should aim to keep all options on the table. While the growth impact of tariffs appears well understood, the impact on inflation is far from certain. This is also reflected in Bloomberg’s survey of economists ahead of the meeting where 26% of respondents expected higher inflation in the near term.