Interest rates continue to fall: ECB takes decisive decision!

Interest rates continue to fall: ECB takes decisive decision!

In a crucial meeting, the European Central Bank (ECB) On Thursday in Frankfurt the deposit rate was reduced to 3.00 percent, which represents the fourth interest rate step this year. The main refinancing rate was also reduced from 3.40 to 3.15 percent. These measures should be understood in the context of a gloomy economic outlook and declining concerns about inflation. Central Bank chief Christine Lagarde and her team continue to rely on cautious easing measures to keep inflation stable at a medium-term target of two percent.

Economic uncertainties and market forecasts

The ECB operates in a complex economic environment that, despite positive developments - inflation will be 2.3 percent in 2024 - is burdened by weak economic data. Political instability in Germany and France, the euro zone's largest economies, is adding to the uncertainty. The threat of tariffs under Donald Trump's possible second term in office could also have a negative impact on the eurozone economy. Bundesbank President Joachim Nagel warned that tariff plans could cause enormous damage to Germany, which could reduce economic output by one percent, he said FTD.

A further cut is forecast for future interest rate policy, with 73 of 75 economists surveyed in a Reuters poll expecting a further cut of 0.25 percent by the end of the year. According to some experts, the deposit rate could even fall to 1.75 percent by mid-2025, reflecting concerns about economic stability in the euro area.