No. 964 - The bank-based transmission of the 2024-25 monetary policy easing in the euro area

by Matteo Santi and Stefano Schiaffi
September 2025
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This paper assesses the intensity with which the monetary policy easing that started in June 2024 was transmitted to banks' funding costs and lending rates in the euro area. After a descriptive comparison with the 2008-09 easing cycle, we estimate an econometric model to evaluate the transmission of policy rate cuts to lending rates with reference to historical regularities.

The pass-through to banks' funding costs was slightly weaker compared with 2008-09, due to the lower sensitivity of overnight deposit rates. The pass-through to firms' lending rates was slightly stronger, owing to banks' relatively muted risk perception. Econometric evidence indicates that the pass-through of the monetary policy easing started in June 2024 is broadly in line with that of past policy rate changes.

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  1. 17 September 2025
    No. 964 - The bank-based transmission of the 2024-25 monetary policy easing in the euro area
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