The European Central Bank (ECB) has lowered the main deposit rate to 3.25% from 3.50%, which was the second rate cut in as many meetings.

Isaac Stell, investment manager at Wealth Club, said of the rate cut: “The ECB has lowered the main deposit rate to 3.25%, its second cut in just five weeks as the fight against inflation seems to be coming to a close. The cut by the ECB follows revised annual inflation numbers for September, which came in at 1.7% rather than the 1.8% initial estimate, down from the 2.2% recorded in August. The rate is now meaningfully below the banks 2% target.

“The ECB is now likely to switch its focus from fighting inflation to its new opponent, fighting weak economic growth. The lacklustre growth in the Euro Area, which expanded by just 0.2% in the three months to June 2024, highlights the need for a turnaround in fortunes.”

Ben Nichols, MD at RAW Capital Partners, added: “For global investors, the ECB’s confidence in cutting the base rate again, along with signals of another potential cut in December, could act as a catalyst for increased investment. Borrowing costs are falling, so we may see stronger economic growth in the months ahead, which could in turn enhance the appeal of European assets.”