ECB reduces interest again: What does that mean for our economy?

ECB reduces interest again: What does that mean for our economy?

Frankfurt, Deutschland - On December 12, 2024, the European Central Bank (ECB) decided to reduce interest rates in the euro area again by 0.25 percentage points to 3.00 percent. This already marks the fourth interest rate reduction this year, as reported. The ECB's decision is made against the background of a cloudy economic situation and growing inflation concerns in the euro zone. ECB President Christine Lagarde and her colleagues are faced with a difficult situation, since the pressure on the economy increases and the inflation rate is still above the desired target value of 2.0 percent.

The current inflation rate is 2.3 percent, and the so -called core inflation, which excludes volatile prices for energy and food, remains stubborn with 2.7 percent. This ensures uncertainty in terms of future price development, in particular with regard to possible effects of the new US government's trade policy and impending tariffs, such as FAZ . However, the ECB is optimistic that inflation can stabilize sustainably, while it is confronted with the worries about the worry of economic uncertainties.

economic challenges

The concerns about continuing economic weakness have increased, and the forecasts for growth in the euro area were corrected downwards. For 2024, the ECB expect modest growth of only 0.7 percent, compared to the more optimistic values that were previously promised. Experts, including Sebastian Dullien from the IMK Institute, warn that interest is kept at a level that could also burden the economy. Almost unanimously, they are calling for further interest reductions in the coming year to support the battered economy.