ECB interest rate: reduction after a weak economy and inflation?

ECB interest rate: reduction after a weak economy and inflation?

The European Central Bank (ECB) faces a decisive meeting that takes place in Frankfurt on Thursday. It is generally expected that the ECB will reduce the key interest rates for the fourth time this year. According to a survey by Reuters under 75 economists, 73 expect a reduction of 0.25 percentage points, which would reduce the deposit rate from currently 3.25 percent to 3.0 percent. This development is particularly relevant for savers, since banks have to pass on the reduced interest rate in the form of lower daily and fixed deposit interest, such as oe24.at reported.

political and economic uncertainties

The political and economic situation is currently tense for the ECB. The uncertainties regarding the government crises in the two largest economies in the Euro area, Germany and France, give the decisions additional explosiveness. Against the background of increasing public debt and a high budget deficit in France, questions will be made as to whether the ECB could intervene if the situation is further deteriorated. The possible trade conflicts with the designated US President Donald Trump could also increase the pressure on the economic stability of the euro zone, added the Kleine Zeitung .

The retiring inflation in the euro zone, which reached a maximum of 10.6 percent in October 2022, could move the ECB to reduce interest rates quickly. ECB council members, such as Austria's National Bank governor Robert Holzmann, have already indicated that a reduction of 0.25 percentage points is likely. In the past few months, an interest rate reduction has been carried out several times, so that the market has now been taken on further measures by the central bank. Economists expect a continuous maintenance of the relaxed monetary policy in order to stimulate weak economic development for the coming months.