Earlier this week the ECB cut interests rates to 3.5%
- This is a quarter point rate cut from 3.75%
- In June the rate was cut from 4% to 3.75%
- This decision was unanimous, unlike the cut in June
- ECB President Christine Lagarde said inflation data was comforting in their confidence
- Eurozone inflation slowed to 2.2% in August
- July’s level was 2.6%
- This is the lowest number in 3 years
- Confidence that the ECB will reach a soft landing at 2% is high
- Some analysts however seem to worry about slowing growth
- ECB forecasted growth of 0.8% for this year and 1.3% for 2025
- In June this forecast was at 0.9% and 1.4% respectively
- Germany’s economy has been on a slowdown recently, teetering on the edge of recession, which contributed to this revision
- Holzmann, one of the members involved in the rate cut decision claimed that rates will be cut again this year
- He also claimed that by mid 2025 we may even see rates at 2.5%
- Holzmann was the sole member who voted against the rate cut in June
- Many other banks are planning to cut rates in the near future
- US Rate decision is to be held next week
Most forecast a cut to occur