NN Group: Solvency Might Start Testing the 190% Limit

With the European Central Bank lowering the preset interest rate that banks may earn on their overnight deposits under the Eurosystem, the ECB has lowered this deposit facility interest rate by 75 basis points since the beginning of the year. The decision to lower its three key interest rates in October comes on the back of a 50-basis-point drop in eurozone inflation in September. With that fall, inflation is now below the ECB's eurozone target of 2%, which it wanted to achieve by late 2025. Inflation is expected to rise until the end of the year as wages continue to climb and political tensions could potentially add to this. There is some medium expectation that the ECB will cut rates again at its Dec. 12 meeting, bringing total ECB deposit facility cuts to 1% for the year.