The European Central Bank (ECB) recently announced a reduction in its main interest rate by 0.25%, bringing it to 3.25%. The move marks the third rate cut this year, as inflation in the euro zone continues to fall.
The ECB reduces its interest rates!
Annual inflation in the euro zone fell to 1.7% in September, its lowest level in more than three years. This drop in inflation is largely due to lower energy costs, which fell 6.1% from the previous year. In response to this trend, the ECB decided to reduce borrowing costs to support economic growth in the region.
The deposit rate, main refinancing operations rate and marginal lending facility rate were also reduced to 3.25%, 3.40% and 3.65% respectively. These adjustments aim to make financing conditions more favorable for businesses and households, in order to support domestic demand and promote economic recovery.
Stimulation of economic activity
The ECB's decision comes against a backdrop of economic slowdown in the euro zone. According to the institution's forecasts, economic growth is expected to slow to 0.2% in the third quarter and to 0.8% for the whole of 2024. By lowering interest rates, the ECB hopes to stimulate growth. economic activity and encourage investments.
The ECB also emphasizes that this decision is based on an updated assessment of the inflation outlook and underlying inflation dynamics. The institution therefore remains committed to bringing inflation back to its 2% target in the medium term and will continue to adjust its monetary policy based on incoming economic and financial data.
In short, the ECB's reduction in interest rates to 3.25% reflects a strategy aimed at supporting economic growth in a context of low inflation. The measure should help stabilize the eurozone economy and encourage investment, while maintaining tight control over inflation.
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