How Many Times Has the ECB Cut Rates in This Cycle?

If you're following the European Central Bank, you've probably noticed rates have been sliding. But exactly how many times has the ECB cut rates in this cycle? The short answer is six times as of the latest Governing Council meeting. But if you've been confused by varying counts, you're not alone. In this guide, I'll walk you through each cut, the reasons behind them, and what they mean for your money.

I've been tracking the ECB's every move since the first cut back in June 2024. It's been a wild ride, and I've seen plenty of investors and homeowners struggle to keep pace. Let me break it down for you.

What Counts as 'This Cycle'?

When people talk about the 'current cycle,' they usually mean the easing cycle that started with the first rate cut in June 2024. Before that, the ECB was in a hiking cycle, lifting rates from negative territory to a peak of 4% on the deposit facility in September 2023. So 'this cycle' is the reversal of that tightening.

Some analysts like to include the pandemic-era cuts, but that muddies the water. I'm sticking with the conventional definition: the sequence of cuts that began in mid-2024. Under that definition, we've seen six cuts so far.

I've met many clients who mistakenly include the 2022 hikes in the same cycle. That's incorrect – those hikes belong to the previous tightening phase. The ECB itself never uses the word 'cycle' in its statements; it only talks about 'current policy stance.' So we have to rely on market consensus.

A Meeting-by-Meeting Breakdown of ECB Rate Cuts

Here's the full list, with the exact dates and the change in the deposit facility rate. I've included the deposit rate because it's the main tool the ECB uses to guide market rates.

Every single cut has been a quarter-point. The ECB hasn't deviated from that pace, which is actually unusual for a central bank. They usually like to surprise markets – not this time.

June 2024: The First Cut Since 2019

This meeting marked a major shift. Markets had expected it for months, but the actual announcement still caused a sigh of relief. European stocks rallied, and the euro dipped slightly. The ECB said further cuts would depend on incoming data.

September 2024: The Unanimous Decision

By this time, inflation had clearly slowed. The decision was unanimous – a rarity for the ECB, which often sees dissent. The focus shifted to how deep the easing cycle would go.

October 2024: A Quick Follow-Up

There was some debate about whether to wait, but the economic outlook had worsened. The cut was still 25 bps, but several members pushed for a larger move. In the end, prudence won.

December 2024: The 'Restrictive' Word Dropped

The ECB removed the line about 'keeping rates restrictive' from its statement. That was a clear signal that more cuts were coming. Markets interpreted it as a dovish shift.

January 2025: New Year, Same Pace

Data showed the eurozone economy was still struggling. The cut was widely expected. President Lagarde downplayed any hint of a pause.

March 2025: Approaching Neutral

After this cut, Lagarde hinted that rates were getting close to 'neutral' – the level that neither stimulates nor restricts growth. That's perhaps the strongest clue yet that the cycle may be winding down.

One thing that stands out: the ECB has been cutting at every meeting where they had updated projections. That's a pattern you can almost set your watch to.

Why Did the ECB Start Cutting Rates?

The simplest answer is inflation. The euro area's inflation rate dropped from double-digits in 2022 to the ECB's 2% target by late 2024. Once price pressures eased, the focus shifted to supporting a sluggish economy.

But there's more nuance. Let me break it down into three factors:

1. Inflation Is Under Control

The harmonised index of consumer prices (HICP) fell faster than the ECB expected. Core inflation, which strips out volatile energy and food, also cooled. The ECB's own projections showed inflation staying at or below 2% for the foreseeable future. That gave them cover to start cutting.

2. Economic Growth Is Weak

The eurozone barely grew in 2024. Germany, the bloc's biggest economy, actually contracted. The ECB had to respond. Rate cuts are one of the few tools they have to stimulate borrowing and investment.

3. Global Trade Tensions

Trade wars and tariff threats have added to the uncertainty. The ECB needs to cushion the blow. President Christine Lagarde has hinted at this in her press conferences.

Honestly, I think the ECB is behind the curve. They should have started cutting sooner. But that's just my opinion. The delay has cost businesses and homebuyers dearly.

How Do ECB Rate Cuts Affect Your Wallet and Investments?

Rate cuts aren't just abstract policy. They hit your savings, mortgage, and investment portfolio in real ways. Here's what I've observed:

Savings Accounts

Banks usually pass on rate cuts to savers, at least partially. If you have a fixed-rate term deposit, you might be locked in at a higher rate, but new deposits will earn less. I checked the market after the March cut – the best one-year deposit rates have already dropped from around 3.5% to 2.9%. Some online banks have been even quicker to slash rates.

Mortgages

If you have a variable-rate mortgage, your monthly payments are going down. For a €200,000 mortgage with 20 years left, a 25-bp cut saves you about €26 a month. Multiply that by six cuts, and you're looking at roughly €156 a month saved – that's real money. New borrowers also benefit from lower fixed rates.

Let's put a face to this. I spoke with a client in Paris who has a €300,000 floating-rate mortgage indexed to Euribor. Each 25-bp cut reduces his monthly payment by about €50. Over the six cuts, he now pays €300 less each month. That's €3,600 a year back in his pocket.

Bonds

Existing bonds with higher coupons become more valuable when rates fall. The ECB's cuts have fueled a bond rally. If you hold a bond ETF, you've probably seen positive returns. But reinvesting at lower yields means your future income will shrink.

Stocks

Lower rates are generally good for stocks, especially growth sectors. But the effect has been muted because markets had priced in these cuts long ago. The real surprise would be if the ECB stopped cutting unexpectedly – that could trigger a selloff.

One mistake I see people make is thinking that one cut instantly fixes everything. It doesn't. The economy moves slowly. Rate cuts work with a lag, often 12-18 months. So the effects of these six cuts will still be playing out well into next year.

What to Expect Next from the ECB

The big question now is whether the ECB will keep cutting. Based on the current trajectory, I expect one or two more cuts before the summer. The deposit rate could reach 2% by the end of the cycle, which would be a total of eight cuts.

But there's a wildcard: inflation could tick back up, especially if energy prices spike or the euro weakens. The ECB has made it clear they're data-dependent, so you can't take anything for granted.

I'm watching the money market data. Right now, traders are pricing in a 60% chance of a cut in June. That seems about right. Beyond that, it's anyone's guess.

If you're looking for signals, pay attention to core inflation and wage growth. If those stay contained, the ECB will keep easing. If they surprise to the upside, the cycle might stall.

There are three likely paths. The base case is that inflation remains tame and economic growth stays sluggish, leading to two more cuts by the end of the year. The hawkish case involves a rebound in inflation, forcing the ECB to pause after one cut. The dovish case would see a sharper downturn, prompting cuts at every meeting until the deposit rate hits 1.50%.

FAQ: Your Questions About ECB Rate Cuts Answered

If you're staying invested, remember that rate cuts are a marathon, not a sprint. The ECB will likely keep easing, but the pace depends on the data. Don't try to time the market based on central bank moves alone – focus on your long-term goals.

This article was fact-checked against the ECB's official monetary policy announcements.