The year-on-year inflation in the eurozone has decreased to 1.7%, the first instance in over three years where it falls below the ECB's target of 2%. This reduction is attributed to changing energy costs, which fell by 6.1% compared to the same month last year, indicating the initial effects of the ECB's aggressive monetary policy following a peak inflation rate of 10.6% in October 2022.
Following the peak inflation rate of 10.6% in October 2022, the European Central Bank responded by aggressively raising rates. However, as the inflation situation has eased, the ECB has cut rates twice this year, redirecting its focus towards combating weak economic growth in the eurozone, projected to slow significantly in the coming quarters.
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