Tag: European Central Bank

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EU reduces interest rate to 2.25%

EU reduces interest rate

The European Central Bank (ECB) announced its seventh consecutive interest rate cut on Thursday 17th April 2025, lowering the rate by 0.25% to 2.25%.

This decision aims to counter economic growth concerns fueled by global trade tensions, particularly the impact of tariffs imposed by the United States.

The ECB’s move is expected to make borrowing more affordable, supporting consumer spending and business investment.

Inflation in the eurozone has fallen to 2.2%, close to the ECB’s target, shifting the focus to growth worries.

The eurozone economy grew by a modest 0.2% in the last quarter of 2024, highlighting the need for measures to stimulate activity.

The ECB’s decision reflects the challenges posed by trade uncertainties and the potential impact of tariffs on European industries.

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EU cuts interest rates again down to 2.5%

ECB interest rate cut

The European Central Bank (ECB) on 6th March 2025 reduced its interest rates to 2.5%, marking the sixth reduction since June 2024

The bank stuck to its plan in the face of economic challenges, including threats of U.S. tariffs and plans to boost European military spending.

This move reflects a shift in focus from combating inflation to supporting economic growth in the Eurozone.

Inflation has eased to 2.4% in February, and the ECB expects it to stabilise around its 2% target.

Economic growth forecasts for 2025 and 2026 have been lowered to 0.9% and 1.2%, respectively.

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Euro zone economy grows 0.4% in third quarter – better than expected

Euro Zone GDP

The euro zone’s economy expanded by 0.4% in the third quarter, according to flash figures released by the European Union’s statistics office (Eurostat) on Wednesday 30th October 2024.

Economists had anticipated a growth of 0.2%, following a 0.3% increase in the second quarter.

Analysts predict that euro zone growth may pick up cautiously in the upcoming months, in light of lower interest rates and subsiding inflation.

At its October 2024 meeting, the European Central Bank (ECB) reduced rates for the third time this year, following a final reading of September’s EU headline inflation at 1.8%.

The ECB pointed to sustained indications of sluggish activity in the euro area as a significant reason for the rate cut in October.

Markets have completely factored in another 0.25% reduction by the ECB for its final meeting of the year in December 2024.

Germany, the largest economy in the euro zone, reported an unexpected 0.2% growth in the third quarter, as per figures released on Wednesday 30th October 2024. This growth helped the country steer clear of the recession predicted by some economists.

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Euro zone inflation falls to 1.8% in September 2024 below the ECB target of 2%

In September 2024, inflation in the Euro zone fell to 1.8%, falling below the European Central Bank’s target of 2%, according to early data from Eurostat released on Tuesday 1st October 2024

Excluding the more volatile prices of energy, food, alcohol, and tobacco, the core inflation rate stood at 2.7%, marginally below the anticipated forecasts.

This inflation figure matched the predictions of economists.

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European Central Bank (ECB) cuts interest rate by 0.25% to 3.75%

On Thursday, 6th June 2024, the European Central Bank announced a reduction in interest rates, a move that was widely expected, despite persistent inflationary pressures in the eurozone, which comprises 20 nations.

The central bank’s primary rate has been lowered to 3.75%, a decrease from the historic high of 4% where it has remained since September 2023.

The money markets had completely anticipated the 0.25% reduction at the June meeting. This marks the first decrease since September 2019, when the deposit rate was below zero.