ECB Signifies 'Declining Path' for Interest Rates Amid Euro Zone Slowdown
The European Central Bank has cut interest rates again, indicating more reductions in borrowing costs as inflation slows and economic growth weakens in the euro zone. The latest cut brings the deposit rate down to 3.50%. The ECB President emphasized a data-dependent approach, without specific commitments to future rate changes.
The European Central Bank cut interest rates again on Thursday, signaling a 'declining path' for borrowing costs as inflation slows and economic growth in the euro zone falters. The ECB lowered its deposit rate by 25 basis points to 3.50%, following a similar reduction in June, moving closer to its 2% inflation target.
The widely anticipated move shifts investor attention to future decisions, particularly in light of the U.S. Federal Reserve's expected rate cuts. ECB President Christine Lagarde stated that while the direction of rate cuts is clear, the specifics are not predetermined. Sources indicated that another rate cut in October is unlikely unless growth deteriorates significantly.
ECB policymakers are expected to wait until December for more comprehensive data and projections. Lagarde highlighted the mixed dynamics of price pressures, with rising wages sustaining inflation, while corporate profits are absorbing wage increases. The debate persists between dovish policymakers worried about recession risks and hawkish members concerned about persistent underlying inflation pressures.
(With inputs from agencies.)
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