The timing and speed of future rate cuts are **very uncertain**, according to European Central Bank President Christine Lagarde, after the central bank started lowering borrowing costs from record highs.

The widely-expected move will see the interest rate on its main refinancing operations fall from **4.

5% to 4.

25%**.

The rate on its marginal lending now stands at **4.

5%**, while its deposit facility interest rate is **3.

75%**.

The ECB said the decision to cut rates was made due to the easing in the rate of inflation in the eurozone.

**'Underlying inflation has also eased, reinforcing the signs that price pressures have weakened, and inflation expectations have declined at all horizons,'** the bank said in a statement.

**'What is very uncertain is the speed at which we travel and the time that it will take,'** Ms.

Lagarde told a press conference, adding there would be **'bumps on the road'**.

In new forecasts released with the widely flagged rate cut, the ECB said it expected inflation to average **2.

2% in 2025**, up from a previous estimate of **2.

0%**, meaning it was now seen holding above the central bank's **2% target** well into next year.

Inflation in the 20 countries that share the euro has fallen to **2.

6%** from more than **10%** in late 2022, largely thanks to lower fuel costs and an easing of post-pandemic supply snags.

But that progress has stalled recently, and what had looked like the start of a major ECB easing cycle only a few weeks ago now appears more uncertain due to signs that inflation may prove sticky, as has been the case in the United States.

Cutting its deposit rate to **3.

75%** from a record-high **4.

0%**, the ECB gave no indication as to whether that would be followed by a further easing in July.

**'We are not pre-committing to a particular rate path,'** Ms.

Lagarde told a press conference, reading from the Governing Council's statement.

**'Despite the progress over recent quarters, domestic price pressures remain strong as wage growth is elevated, and inflation is likely to stay above target well into next year.

'**With Thursday's move, the ECB joins the central banks of Canada, Sweden, and Switzerland in undoing some of the steepest streaks of interest rate hikes in recent history.

Some ECB-watchers have questioned the logic of moving now, however, especially as the US Federal Reserve has been stopped in its tracks by some stronger-than-expected inflation readings and is not expected to move till after the summer.

Money market investors trimmed their bets on rate cuts after Thursday's announcement and only priced in one more, with a slight risk of a second, for the remainder of the year.

Asked if the ECB was moving into a phase of **'dialling back'** its tight monetary policy stance, Lagarde said she could not confirm such a process was underway, but that there was **'a strong likelihood'**.

**'But it will be data-dependent, and what is very uncertain is the speed at which we travel and the time that it will take,'** she added.

Stronger-than-expected data about eurozone inflation, wages, and economic activity over the last few weeks has fueled fears of a more difficult **'last mile'** on the way to the ECB's goal - a concern expressed by influential board member Isabel Schnabel.

Inflation in services, which some policymakers have singled out as especially relevant because they reflect domestic demand, has been a particular concern after a rise to **4.

1%** in May from **3.

7%** a month earlier.

At the same time, a rebound in growth also reduced the urgency for the ECB by undermining the argument that high rates are choking economic activity.

But the real elephant in the room may remain the Fed and whether it starts or further delays its own easing cycle.

A more restrictive Fed would likely mean a weaker euro and higher imported inflation for the currency bloc, but it would also increase yields on global bond markets - a double whammy whose net effect is hard to predict.

**'The pace of rate cuts will be dependent on the US and the Fed,'** Mohit Kumar, an economist at Jefferies said.

**'In the event that the Fed doesn't cut rates at all this year - not our base case - we could see only two cuts from the ECB this year.

'**Following the ECB announcement, Bank of Ireland has confirmed that tracker mortgage rates will decrease for all tracker mortgage customers by **0.

25%**.

**'Bank of Ireland will write to all tracker mortgage customers confirming the new interest rate, the effective date, and their new repayment amount.

'** Meanwhile, non-bank lender ICS Mortgages has announced a cut to its owner-occupier variable rate, in line with the ECB decision.

It said that, effective from **1st July**, its variable rate on mortgages with a loan to value of more than **70%** would fall from **6.

4% to 6.

15%**.

As they rely more on markets for their funding, the rates charged by non-bank lenders tend to be more sensitive to changes made by the ECB.