ECB cuts interest rates for third time in 2024
The European Central Bank (ECB) cut interest rates on Thursday, as expected, as inflation in the eurozone continues to fall. This is the ECB's third rate cut this year, and its first consecutive rate cut in 13 years.
Specifically, the ECB cut the deposit rate at which banks can deposit their money with the ECB by 0.25 percentage points, to 3.25 per cent. It is the third rate cut in 2024, after cuts in June and September.
Interest rates are now at their lowest level since early 2021. In the aftermath of the COVID-29 pandemic, the ECB had implemented a long series of interest rate hikes to get high inflation under control. In September, inflation fell below the 2 per cent target.
"The incoming information on inflation shows that the disinflationary process is well on track," the ECB said. "The inflation outlook is also affected by recent downside surprises in indicators of economic activity."
"The incoming information on inflation shows that the disinflationary process is well on track"
Cutting interest rates should make borrowing cheaper and hopefully stimulate the stagnating eurozone economy. On the other hand, it makes saving less worthwhile.
The ECB has given no indication of what it will do at upcoming meetings, saying only that it will assess the data on a meeting by meeting basis. However, markets have already priced in three more rate cuts by March 2025.
© Kirill KUDRYAVTSEV / AFP
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