12/09/2024 – 9:43
The European Central Bank cut interest rates again on Thursday amid slowing inflation and faltering growth, but provided little clue about its next move, with investors betting on continued easing in coming months.
The ECB cut its deposit rate by 25 basis points to 3.50% in a widely heralded move and following a similar cut in June, against a backdrop of inflation within striking distance of its 2% target and the domestic economy on the brink of recession.
With the cut widely expected, investors’ attention has already turned to what comes next, but the ECB has not clarified anything, sticking to its guidance that decisions will be taken on a meeting-by-meeting basis, with no prior commitment to any specific path for the rate.
New projections
The ECB has cut its economic growth forecast for 2024, but still sees inflation broadly in line with its 2% target by the end of 2025.
Weak growth is a key reason inflation is easing, with gross domestic product in the 20 countries sharing the euro expected to expand 0.8 percent this year, down from a 0.9 percent forecast three months ago.
Inflation is estimated at 2.2% next year, above the ECB’s 2% target, but the trajectory of forecasts suggests a decline towards the target in the second half of the year.
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