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The European Central Bank has reduced its reference interest rate by a quarter to 2.75 percent as it seeks to respond to poor growth and decline in the Eurozone inflation rate.
The reduction on Thursday followed a few hours after Eurostat reported that the eurozone economy did not grow at all in the fourth quarter 2024 and the day after the US federal reserves retained their waiting rates, despite the calls of President Donald Trump to reduce the costs of borrowing “a lot.”
In a statement that follows the cut, which requires EcbThe deposit rate to his lowest level from the beginning of 2023, the central bank noted that “monetary policy remains restrictive” – the recognition that interest rates are still greater than the neutral rate that no incentive and holds the economy.
The euro was initially unexpected than the widely expected move, which is 0.1 percent lower compared to the dollar per day at $ 1.041.
The ECB has now reduced the rates five times since last summer, and in the store immediately after the decision, Swaps markets were prices in two or three more decreasing a quarter of a point by the end of the year, unchanged from earlier that day.
The central bank predicts only a slight growth of 0.7 percent for last year as a whole up to 1.1 percent this year.
Unlike the slow progress of the eurozone, American economy It spread at an annual rate of 2.8 percent in the third quarter last year.
Investor expectations that ECB will reduce rates more than Fed weakened the euro this year, which brought it closer to the dollar.
In a shift from the previous Falcons, in December, the ECB gave up the obligation to “maintain a policy rate as restrictive as needed” to reduce inflation according to a goal of 2 percent.
The inflation fell from the top 2022. From 10.6 percent to 2.4 percent in December.
This is a development story
