The European Central Bank lowered interest rates by a quarter point to 2.75% as economic growth in the eurozone stagnates, particularly affecting major economies like France and Germany. Despite high inflation in some sectors, wage growth is slowing, with many businesses absorbing costs. Economic activity was minimal in the last quarter of 2024, prompting markets to predict further rate cuts. Experts, including Carsten Brzeski from ING, argue that the current state still calls for additional cuts to support the struggling economy and manage public spending wisely.
The European Central Bank has cut interest rates by a quarter point to 2.75% in response to stagnant growth across the eurozone, with financial markets anticipating further reductions.
Amid stagnation, businesses are absorbing costs rather than passing them onto consumers. However, the Eurozone's broader economic outlook remains weak, prompting discussions of additional rate cuts.
Carsten Brzeski highlighted that while the rate cut was justified, further reductions were necessary to tackle the sluggish growth evident in recent economic data.
Despite a slight easing in rates, the deposit interest rate is still considered restrictive for the eurozone's current weak economy, potentially hampering growth.
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