ECB’s second rate cut in 2024 reflects falling inflation and concerns over euro zone economic slowdown
The European Central Bank (ECB) has cut interest rates by 25 basis points to 3.5% in response to falling inflation in the euro zone and signs that the bloc’s economy could stagnate. The decision, announced on Thursday (12), marks the second reduction in the ECB’s base deposit rate this year, coming at a time when The US Federal Reserve is also expected to begin cutting interest rates next week.
Major central banks have started cutting rates in response to signs that the biggest bout of inflation in decades is fading, according to the Financial Times. Some analysts believe the ECB is likely to cut rates again at its final two meetings this year.
Euro zone inflation slowed in August to a three-year low of 2.2% after 2.6% in July. Falling industrial output in Germany and Italy raised concerns about a potential economic slowdown in the euro zone after a brief period of growth earlier this year.
However, some ECB policymakers are wary of cutting rates too aggressively, as accelerating wage growth could keep inflation above the bank’s 2% target. Even so, wage increases are slowing. The ECB’s negotiated euro zone wage growth estimate fell to 3.6% in the second quarter from 4.7% in the first quarter.
Source: https://www.ocafezinho.com/2024/09/12/banco-central-europeu-reduz-taxa-de-juros-para-35/
