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Eurozone economy: ECB cuts rates and revises inflation forecasts


December, 12 2024
watermark Economic news

The European Central Bank has cut interest rates again to stimulate the economy and control inflation approaching the 2% target. The rate on bank deposits was reduced to 3% from 3.25%, which was the fourth decrease this year. Basic and marginal lending rates were also reduced.


In addition, the ECB revised the forecast for eurozone GDP growth for 2024 to 0.7% from 0.8% expected in September. Forecasts for 2025 dropped to 1.1% from 1.3%, and for 2026 to 1.4% from 1.5%, indicating a slower economic recovery.


Inflation forecasts for the coming years were also slightly lowered. Consumer inflation is expected to reach 2.4% this year, 2.1% in 2025, and remain at 1.9% in 2026. Inflation is projected at 2.1% in 2027, due to the introduction of a new emissions trading system in the EU.


Core inflation, excluding energy and food prices, is expected to reach 2.9% in 2024 and 2.3% in 2025, in line with previous forecasts. For 2026, the forecast was slightly lowered to 1.9%, and 1.9% is expected in 2027.


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Foreign exchange is highly speculative and complex in nature, and may not be suitable for all investors. Forex trading may result in a substantial gain or loss. Therefore, it is not advisable to invest money you cannot afford to lose. Before using the services offered by ForexMart, please acknowledge the risks associated with forex trading. Seek independent financial advice if necessary. Please note that neither past performance nor forecasts are reliable indicators of future results.