European Central Bank Cuts Rates: Impact on Policymakers and Inflation Outlook
The European Central Bank cut interest rates again on Thursday as inflation slows and economic growth falters, providing almost no clues to its next step. The ECB lowered its deposit rate by 25 basis points to 3.50 per cent, following up on a similar cut in June as inflation approaches the 2 per cent target. Investor focus now shifts to ECB President Christine Lagarde's press conference, where she will discuss potential impacts of Federal Reserve moves on the ECB's policies.
Policy Insights from the Governing Council
The Governing Council emphasized a data-dependent, meeting-by-meeting approach, leaving investors uncertain about future rate adjustments. With labour costs moderating but inflation pressures persisting, debates among policymakers intensify.
Economic Projections and Market Reactions
Recent forecasts have shown slight adjustments in growth expectations for this year, with inflation anticipated to reach target levels only in the latter half of next year. This situation leads to divided opinions on the pace of future easing, with hawkish members advocating for quarterly cuts.
This article was prepared using information from open sources in accordance with the principles of Ethical Policy. The editorial team is not responsible for absolute accuracy, as it relies on data from the sources referenced.