By the Numbers

ECB vs. Fed Funds Rates

The ECB decided to hold its main rate at 4% today, while the US Federal Reserve and the Bank of England have been cutting rates.  Like the Fed, the European Central Bank is caught between inflationary pressures and a slowing global economy. 

In January, the Fed cut rates to 3.0%.  Today the Bank of England lowered its rate to 5.25%, while the ECB kept its rate at 4%.  Here is a chart of the ECB vs. the Fed for the past 10 years.  Notice that the ECB tends to lag the Federal Reserve both in easing and tightening.  It also has kept within a tighter range than its US counterpart.

  • In 1999, the Fed started raising rates in June, while the ECB did not begin to raise its rates until Nov.
  • The Fed began cutting rates in Jan 2001; the ECB cut in May
  • The Fed started raising rates in June 2004 and the ECB did not raise rates until Dec 2005
  • The Fed started cutting rates again in Sept 2007.  The ECB has not yet cut rates.