> The European Central Bank has cut interest rates by a quarter point to 3.25 per cent, amid signs that growth and inflation in the Eurozone are weakening. Thursday’s move took Eurozone rates to their lowest point since May 2023 and followed a cut of the same size at the ECB’s meeting last month. It was widely anticipated following the release of cooler-than-expected economic data.
> “The incoming information on inflation shows that the disinflationary process is well on track,” the ECB said. “The inflation outlook is also affected by recent downside surprises in indicators of economic activity.” German officials have warned Europe’s biggest economy is set to shrink for the second consecutive year. Eurozone inflation fell to 1.7 per cent in the year to September, sinking below the central bank’s 2 per cent target for the first time in more than three years. Before the meeting, traders in swaps markets were pricing in another four or five quarter-point rate cuts by the middle of next year, including the near-certainty of a cut in December.
> The US Federal Reserve reduced its benchmark interest rate in September for the first time in more than four years, lowering borrowing costs by a half-point and signalling more reductions on the way. The Bank of England is also expected to lower rates again in November, after cuts earlier this year. The ECB started to cut rates in June and has now lowered borrowing costs three times. Thursday’s decision was made in Ljubljana, at the Slovenian central bank. The ECB forecast in September that inflation would rise at the end of this year but dip back under 2 per cent over the second half of next year.
1 Comment
> The European Central Bank has cut interest rates by a quarter point to 3.25 per cent, amid signs that growth and inflation in the Eurozone are weakening. Thursday’s move took Eurozone rates to their lowest point since May 2023 and followed a cut of the same size at the ECB’s meeting last month. It was widely anticipated following the release of cooler-than-expected economic data.
> “The incoming information on inflation shows that the disinflationary process is well on track,” the ECB said. “The inflation outlook is also affected by recent downside surprises in indicators of economic activity.” German officials have warned Europe’s biggest economy is set to shrink for the second consecutive year. Eurozone inflation fell to 1.7 per cent in the year to September, sinking below the central bank’s 2 per cent target for the first time in more than three years. Before the meeting, traders in swaps markets were pricing in another four or five quarter-point rate cuts by the middle of next year, including the near-certainty of a cut in December.
> The US Federal Reserve reduced its benchmark interest rate in September for the first time in more than four years, lowering borrowing costs by a half-point and signalling more reductions on the way. The Bank of England is also expected to lower rates again in November, after cuts earlier this year. The ECB started to cut rates in June and has now lowered borrowing costs three times. Thursday’s decision was made in Ljubljana, at the Slovenian central bank. The ECB forecast in September that inflation would rise at the end of this year but dip back under 2 per cent over the second half of next year.
!ping EUROPE