Even though Europe is experiencing its largest economic policy upheaval in decades due to plans to increase military spending and an impending trade war with the US, the European Central Bank slashed interest rates as anticipated on Thursday while leaving the door open for more.
In response to declining inflation and weak economy, the ECB eased its deposit rate to 2.5% for the sixth time since June. It stated that rates were still limiting growth, albeit less so than in the past.
Given that the bank has long stated that restrictions are no longer required and that inflation, which was 2.4% last month, is securely returning to its 2% target this year, that wording raises the possibility of additional rate reduction.
In contrast to its earlier guidance that rates remained tight, the ECB said in a statement that “monetary policy is becoming meaningfully less restrictive.” “The process of disinflation is proceeding according to plan. Given that policy hawks are already urging prudence, the subtle wording indicates that another rate decrease in April is not inevitable.
On Thursday, the ECB also reduced its prediction for economic growth in 2025 for the fourth consecutive time, setting it at only 0.9, marginally faster than the 0.7% growth rate from the previous year. Meanwhile, this year’s inflation rate was 2.3%, higher than the 2.1% rate recorded three months prior.
Also Read:
Crafting Bespoke Living Experience In Exquisite Locations With Glover Investments: Steven Glover
About Author
