- On 5 June the ECB cut the deposit rate to 2%, its eighth cut since June 2024.
- It signalled that the cycle of cuts was close to ending.
- With rates more stable, it is wise to review mortgages, loans and the return on cash.
On 5 June 2025, the European Central Bank cut the deposit rate to 2%, its eighth cut since June 2024. It also signalled that the cycle of cuts was close to ending, that is, that the next step might be a pause rather than another cut. It was a relevant message for anyone with debts or savings, because benchmark rates had been falling for a year and families and companies had been adjusting their accounts to that movement.
The day before, the United States had doubled the steel tariff to 50%, a reminder that trade uncertainty was still present while the ECB normalised its policy. Interest rates and tariffs act through different channels, but both influence the cost of borrowing, prices and the investment decisions of companies and families, which is why it makes sense to look at them together.
Eight cuts in a year
Since June 2024, the ECB had cut the deposit rate eight times, to 2%. That end-of-cycle signal suggested that rates would settle at levels similar to those then. Expectations matter as much as decisions, because the market anticipates what the central bank seems willing to do.
For anyone with a variable-rate mortgage, the eight cuts had been passed on, with a delay, to the instalments. For savers, on the other hand, they had reduced the return on deposits and accounts. That the cycle was close to its end meant both movements would tend to slow, and that it was worth reviewing one’s position instead of waiting for further changes.
Money neither dear nor free
With rates at neutral levels, money was no longer either expensive or free. For families, this means that variable-rate mortgage instalments would stop falling at the previous pace; for companies, that the cost of borrowing was stabilising, although trade uncertainty remained, as the steel tariff reminded everyone. It therefore makes sense to plan with today’s rates as the reference rather than those of a year ago.
An environment of stable rates makes planning easier. Future instalments can be calculated with more certainty, offers can be compared and it is easier to decide calmly whether to fix the rate on a loan or keep it variable. Stability is not a guarantee, but it removes one of the uncertainties that weigh most on long-term financial decisions and leaves room to concentrate on other variables of the business or the household.
A good point to review
It was a good point to review mortgages, loans and the return on cash. It is worth comparing what is paid on each debt, whether there is room to renegotiate or repay early, and what is earned on savings, weighing each option with an adviser and in the light of each household’s or company’s goals.
An orderly review begins with a simple list: what debts exist, at what rate and with what maturity; what liquidity there is and where it is held; and what spending needs are expected in the coming years. With that information it becomes clear whether there is expensive debt worth reducing or idle money that could have a more suitable use, without taking risks that do not fit each person.
When rates stop falling, it is the moment to put the accounts in order calmly.
This article is general information. It is not legal, tax or investment advice, and it does not take anyone’s particular circumstances into account.
