The European Central Bank (ECB) plans to further reduce borrowing costs in 2025, according to Governing Council member Boris Vujcic.
“The direction is clear—it’s a continuation from 2024, with further reductions in interest rates,” Vujcic, who is also the head of Croatia’s central bank, told state broadcaster HRT1 on Saturday.
Last week, the ECB lowered its deposit rate by 0.25% to 3%, marking the fourth rate cut since June. Officials have signaled additional cuts are forthcoming, though there’s debate over how many will be required.
“I don’t know until what point the ECB will cut rates,” Vujcic said. “That will depend on data, particularly the inflation rate, whether it slows as projected, and how monetary policy transmission impacts the economy.”
One looming challenge is the potential return of trade tariffs, with Donald Trump set to re-enter the White House next month.
“If there is a trade war, it will harm growth in Europe and globally,” Vujcic cautioned, adding that trade wars typically fuel inflation. “We hope to avoid a trade war—it wouldn’t benefit anyone.”
The ECB’s decisions will be closely tied to inflation trends and economic growth, with its policy trajectory aiming to support economic stability amid global uncertainties.