The News
The European Central Bank cut interest rates on Thursday for the fourth time this year, with policymakers warning that growth will be weaker than originally forecast.
The reduction from 3.25% to 3.0% pushes the benchmark deposit rate to it’s lowest level since March 2023, as political instability in the bloc’s biggest economies and US President-elect Donald Trump’s threatened tariff war leave EU economies ”vulnerable,” the Financial Times wrote.
The cut also comes with inflation slowing: ING economists anticipate eurozone rates will fall by a further 1.25 percentage points next year.
The ECB communiqué is one of nine major monetary policy announcements this month, with the US Federal Reserve projected to lower its benchmark rate next week but slow its pace of cuts thanks to buoyant growth.
The implications are significant: A widening trans-Atlantic rate gap is expected to fuel the dollar, while developing countries that borrow in euros and dollars to tempt risk-wary investors will watch for clues over future monetary policy.