ECB Becomes First G10 to Cut Rates, Marking the Start of an Easing Cycle

The European Central Bank announced at its June meeting a 25 bp cut to all three key policy rates, lowering the deposit facility rate to 3.75%, the main refinancing rate to 4.25%, and the marginal lending rate to 4.50%, making it the first G10 major central bank to initiate an easing cycle. EUR/USD fell modestly by about 0.4% following the decision, then partially recovered after President Lagarde delivered a relatively hawkish press conference. Lagarde emphasized that this cut is a "one-off adjustment" based on inflation's return path, with future decisions strictly data-dependent and no pre-set easing path. Markets expect a total of 75 bps of ECB rate cuts for full-year 2025.