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The European Central Bank has warned of the “opposite winds” of the stagnant economy in the euro area, as it reduced the standard interest rate by a quarter of a point to 2.75 percent.
Thursday's decision unanimously, which takes European Central BankA deposit was issued to its lowest level since early 2023, and it came hours after Eurostat stated that the Euro region's economy did not grow at all in the fourth quarter of 2024.
European Central Bank President Christine Lagarde warned that the economy “was to remain weak in the short term,” adding that investigative studies indicate a continuous contraction in manufacturing even with the growth of services. “Consumer confidence is fragile,” she said.
She said that the economic risks “tilted to the negative”, because the larger frictions of global trade can affect the economy of the euro zone while low confidence may serve as withdrawal of investment and consumption.
In a statement accompanying the decision, the European Central Bank confirmed that the decrease in inflation, which decreased from the peak of 2022 amounted to 1022 to 2.4 percent in December, was “good on the right track”, noting that “the economy still faces the opposite wind.”
The central bank added that “monetary policy remains restricted” – a recognition that interest rates are still higher than the neutral rate that does not motivate or hinder the economy.
The euro is reinforced by a widespread expected reduction, an increase of 0.3 percent a day at $ 1.045.
The European Central Bank has now reduced interest rates five times since last summer and in trading immediately after the decision, the siped markets were pricing in two or three other points by the end of the year, and they have not changed from the time earlier in the day.
“Our point of view is that economic data will continue to push the European Central Bank to reduce each meeting until the deposit price reaches 1.5 percent,” said Thomas Weldic, chief European economist in asset director Tr Ro Price.
He pointed to the threat to economic growth in the euro area, which was put in place by US tariff plans, Donald Trump, and the expected decline in inflation later in the year.
The central bank predicts a slight growth acceleration from 0.7 percent for the past year to 1.1 percent this year.
On Thursday, the European Central Bank repeated that “the effective effects of the restricted monetary policy should support the demand for demand over time,” indicating increases in real income and low borrowing costs.
In contrast to slow progress in the euro area, American economy An annual rate of 2.8 percent in the third quarter of last year.
The European Central Bank's decision also came a day after keeping the American Federal Reserve.
Investors' expectations will reduce prices more than the Federal Reserve this year, which is close to the dollar equal.
“At the present time, the question is not whether the European Central Bank will continue to reduce interest rates this year, but by the amount,” wrote Ulrich Catter, the chief economist in Dikabank.
In the transformation from the previous charity language, in December, the European Central Bank decreased in compliance with “maintaining adequately restricted policy rates for the longest necessity” to drop inflation in line with its 2 percent goal.
