The European Central Bank announced 25 points interest rate cuts on Thursday since the central bank began to ease monetary policy in June last year.
This reduction will bring the ECB’s important rate, the deposit facility, to 2.75%. The market was priced at more than 90% of the cuts at 25 bases prior to the announcement.
The ECB has been working to balance the re-acceleration of eurozone inflation in recent months with slower economic growth in the region. After falling below the ECB’s 2% target a few months ago, it rose to 2.4% for the third consecutive month. New inflation was expected as the basic effects of lower energy prices would be disrupted.
Preliminary data released on Thursday shows that the eurozone economy flatlined in the fourth quarter of 2024, but the economists voted for by Reuters continued to expand by 0.4% in the three months leading up to the end of September. It showed that it was expecting growth of 0.1%.
Following the announcement, ECB President Christine Lagarde said the eurozone economy will “remain weak in the short term.”
The state’s US Federal Reserve did not change the US Federal Reserve on Wednesday in line with expectations. The market is generally priced overall with fewer interest rate cuts from the Fed than this year’s ECB.
Speaking to CNBC’s Silvia Amaro, founder of Fed Watch Advisors, Ben Emons said the ECB has room to cut interest rates compared to the Fed.
