EUROPEAN CENTRAL BANK CUT INTEREST RATES – It was the fifth ECB rate cut since June and markets expect two or three more this year
The European Central Bank cut interest rates and kept the door open to further policy easing as concerns over lacklustre economic growth supersede worries about persistent inflation.
It was the fifth ECB rate cut since June and markets expect two or three more this year, driven by arguments that the biggest inflation surge in generations is nearly defeated and the flagging economy needs relief.
The ECB reaffirmed disinflation was “well on track” and welcomed slower growth in wages, which should help bring down inflation in the domestically focussed part of the economy.
With the euro zone economy stagnating in the last quarter due to an industrial recession and weak consumption, the ECB is seen sticking to its easing path even after the U.S. Federal Reserve kept rates unchanged and hinted at a lengthy pause.
ECB policymakers are likely to have breathed a sigh of relief at their meeting after U.S. President Donald Trump’s new administration did not impose blanket trade tariffs as feared, although the threats he made have cast a shadow on the outlook.
