403
Sorry!!
Error! We're sorry, but the page you were
looking for doesn't exist.
European Central Bank announces reduction in interest rates by 25 basis points
(MENAFN) On Thursday, the European Central bank (ECB) announced a reduction in interest rates by 25 basis points, aligning with market expectations. The ECB, under the leadership of President Christine Lagarde, lowered the key deposit rate by a quarter-point, bringing it down to 3.50 percent. This decision marks a continuation of the ECB’s recent adjustments to monetary policy, following a pause in July after an initial rate cut in June. The move reflects the central bank's ongoing efforts to balance economic conditions and inflationary pressures.
In addition to the cut in the deposit rate, the ECB also decreased its main refinancing and marginal lending rates by 60 basis points, setting them at 3.65 percent and 3.90 percent, respectively. This comprehensive adjustment in rates is intended to moderate the degree of monetary policy restriction, based on the ECB’s latest assessment of the inflation outlook, underlying inflation dynamics, and the effectiveness of monetary policy transmission. The central bank's statement emphasized the need for this step in light of current economic conditions.
Recent data shows that headline inflation has fallen to a three-year low of 2.2 percent in August, largely due to a decrease in energy costs. This reduction indicates some progress toward the ECB’s target inflation rate of 2 percent. However, core inflation remains elevated at 2.8 percent, with significant contributions from the services sector. The persistence of higher core inflation suggests ongoing pressures in certain areas of the economy, despite the overall decline in headline inflation.
The ECB’s latest rate cuts are aimed at addressing these inflationary challenges while supporting economic stability. By adjusting interest rates, the central bank seeks to manage inflationary pressures and guide the economy towards its inflation target. The strategic reduction in both the deposit rate and other key rates underscores the ECB’s commitment to balancing economic growth with effective inflation control, as it navigates through the evolving economic landscape.
In addition to the cut in the deposit rate, the ECB also decreased its main refinancing and marginal lending rates by 60 basis points, setting them at 3.65 percent and 3.90 percent, respectively. This comprehensive adjustment in rates is intended to moderate the degree of monetary policy restriction, based on the ECB’s latest assessment of the inflation outlook, underlying inflation dynamics, and the effectiveness of monetary policy transmission. The central bank's statement emphasized the need for this step in light of current economic conditions.
Recent data shows that headline inflation has fallen to a three-year low of 2.2 percent in August, largely due to a decrease in energy costs. This reduction indicates some progress toward the ECB’s target inflation rate of 2 percent. However, core inflation remains elevated at 2.8 percent, with significant contributions from the services sector. The persistence of higher core inflation suggests ongoing pressures in certain areas of the economy, despite the overall decline in headline inflation.
The ECB’s latest rate cuts are aimed at addressing these inflationary challenges while supporting economic stability. By adjusting interest rates, the central bank seeks to manage inflationary pressures and guide the economy towards its inflation target. The strategic reduction in both the deposit rate and other key rates underscores the ECB’s commitment to balancing economic growth with effective inflation control, as it navigates through the evolving economic landscape.
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.
Comments
No comment