ECB Cuts Rates by 25 bps
London, 12 December 2024
As anticipated, in December 2024, the European Central Bank (ECB) will lower its benchmark interest rates by 25 basis points for the fourth time this year.
A more positive inflation outlook and advancements in the transmission of monetary policy are reflected in this action. Forecasts indicate that inflation will progressively decline, reaching 2.4% in 2024, 2.1% in 2025, and 1.9% in 2026.
With a medium-term target of 2%, core inflation—which does not include food and energy—is also anticipated to decline. Although the rate decreases have eased financing circumstances, borrowing rates are still high because prior hikes are still having an impact on current loans.
Economic recovery is forecast to be slower than before, with growth expected at 0.7% in 2024, 1.1% in 2025, and 1.4% in 2026. While without committing to a fixed rate path, the ECB is nevertheless committed to making sure inflation returns to its 2% target and will modify its policies in response to new evidence. (Source: Trading Economics)
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