Inflation drops: ECB lowers interest! What does that mean for us?

Inflation drops: ECB lowers interest! What does that mean for us?

In March 2023, the euro zone recorded an inflation of 2.2 percent, which represents a decline compared to 2.5 percent at the beginning of the year. These figures illustrate the continued trend to stabilize prices in the region. According to Krone , the European Central Bank (ECB) will probably lower the key interest on Thursday, which reflects the expectations of the markets and the economic participants. The ECB has set itself a goal of 2 percent inflation that is targeted in the long term.

If you look at the inflation rates in the individual euro zone countries, a different picture is shown. In France, the inflation rate is 0.9 percent, while in Germany it is 2.3 percent and 3.1 percent in Austria (according to EU calculation, 2.9 percent according to national calculation). The values in Romania are particularly striking with 5.1 percent, Hungary with 4.8 percent and Poland with 4.4 percent, which underlines the different economic locations in the euro zone.

main price driver and economic forecasts

In Austria, the main price drivers are in particular the electricity prices that increase after the electricity price brake has expired. Experts warn of the possible consequences if this trend should last. The current interest rate for banks at the central bank is 2.65 percent, whereby a reduction in the deposit rate is expected to 2.25 percent. These measures could boost lending and thus support economic growth.

For real GDP growth in the euro area, a moderate growth of 0.7 percent is forecast for 2025. This estimate reflects both the uncertainties in the markets and the adjustments that the member states must be made in the euro zone in order to counter the challenges of inflation and the increasing lifestyle costs. Further information can be found on the website of the ezb