ECB Poised for Interest Rate Cuts Amid Stagnant Economy

The European Central Bank is preparing to cut interest rates due to economic stagnation and reduced inflation fears. Despite potential trade tensions, a consensus on rate cuts is expected with ECB President Christine Lagarde likely to maintain existing policy direction while navigating new challenges from U.S. economic strategies.


Devdiscourse News Desk | Updated: 30-01-2025 15:50 IST | Created: 30-01-2025 15:50 IST
ECB Poised for Interest Rate Cuts Amid Stagnant Economy
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The European Central Bank is widely expected to reduce interest rates this Thursday, with further easing measures on the horizon as concerns about sluggish economic growth overshadow persistent inflation worries.

Last year, the ECB reduced borrowing costs four times, with three or four more cuts anticipated in 2025 under the premise that the recent inflation spike is nearing containment and the economy requires aid. The Eurozone's economic stagnation, driven by an industrial downturn and reduced consumer spending, presents a compelling case for a 25 basis point cut in the deposit rate to 3%. Notably, none of the ECB's 26 policymakers have publicly opposed this move.

While ECB President Christine Lagarde may not promise additional cuts, she is expected to reiterate that the policy's direction is clear despite potential trade conflict with the U.S. Economists, meanwhile, foresee risks from U.S. President Donald Trump's trade policies, which could lead to growth volatility, further complicating economic recovery efforts.

(With inputs from agencies.)

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