Analysts anticipate European Central Bank to reduce key interest rate
Date
1/30/2025 3:22:50 AM
(MENAFN) Analysts anticipate that the European Central bank will implement another reduction in its key interest rate on Wednesday, marking the fifth rate cut in the eurozone since mid-2024. The expected move reflects ongoing efforts to stimulate economic activity and address financial challenges within the region.
The anticipated reduction is projected to be by a quarter of a percentage point, lowering the European Central Bank’s deposit rate to 2.75 percent. This downward trend in interest rates is likely to continue through the summer, as policymakers aim to support the struggling Economy within the eurozone and encourage growth in the region.
According to the European Central Bank’s latest projections, inflation is expected to stabilize at 2 percent in the medium term, aligning with the bank’s target for price stability. If this forecast holds true, the central bank may continue adjusting interest rates downward to maintain favorable economic conditions and ease financial pressures.
However, inflation has shown signs of acceleration in recent months. In December, the eurozone’s inflation rate climbed to 2.4 percent, its highest level since July. Given this increase, some central bank officials have expressed concerns about cutting rates too aggressively. They caution that potential trade tensions with the United States under Donald Trump’s leadership and other external factors could contribute to renewed inflationary pressures, making a more cautious approach to monetary policy necessary.
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