Mortgage rates increased on Friday following ECB interest rate cut

On Friday, decision-makers at the European Central Bank cautiously commented on the possibility of additional interest rate cuts. The ECB lowered its key interest rate by 0.25 percentage points from a record high, which caused the Euribor rate to rise. This decision was expected as the ECB had announced it months in advance. The twelve-month Euribor rate, a popular reference rate for mortgages, saw the most significant increase in two weeks following the ECB meeting.

After the interest rate decision, investors relaxed their expectations of future interest rate cuts. This led to a slight increase in the Euribor rate. ECB President Christine Lagarde, during the press conference after the interest rate decision, did not hint at future interest rates and emphasized that the central bank does not commit to specific interest rates in advance.

Following the meeting, there were media interviews with ECB council members who cautiously commented on the possibility of further interest rate cuts. Not all members were in agreement with the decision, with one governor opposing the rate cut. Markets adjusted their expectations of future rate cuts, with the probability of another reduction decreasing significantly. Governor of the Central Bank of Estonia, Madis Müller, stressed the importance of making decisions calmly and not rushing to lower interest rates.

As the ECB continues to assess inflation prospects and other factors at each meeting, the uncertainty around future rate cuts remains. Overall, the market response to the ECB decision highlighted the cautious approach taken by decision-makers.