MENA Newswire News Desk: In a move widely anticipated by economists, the European Central Bank (ECB) cut its key deposit rate by 25 basis points to 3.5 percent today, signaling a continued response to the slowing economic growth and receding inflation within the euro zone. This adjustment marks the second rate cut the ECB has implemented this year as inflation moves closer to the bank’s 2 percent target. The ECB’s decision aligns with an updated economic outlook that shows a reduction in the expected gross domestic product (GDP) growth for 2024, down to 0.8 percent from the previously forecasted 0.9 percent.
This revision comes in the wake of weakening dynamics in household spending and persistent challenges in the manufacturing sector, influenced by softening foreign demand. In addition to the deposit rate, the ECB also reduced other key lending rates by 60 basis points each, emphasizing a strategic shift in its monetary policy to better support the euro zone’s economy amid global economic uncertainties. The rate cut precedes upcoming policy meetings of other major central banks, including the U.S. Federal Reserve and the Bank of England, which are also expected to adjust their monetary policies in response to global economic conditions.
The euro zone’s economic landscape shows mixed resilience across different sectors. While consumer price growth aligns more closely with the ECB’s target, the broader economic activities, especially in manufacturing and consumer sectors, are losing momentum, further justifying the ECB’s cautious approach to monetary easing. The ECB reiterated its commitment to maintaining flexible monetary policy, indicating that future decisions will continue to be guided by economic data and inflation trends. This approach reflects a broader trend among central banks worldwide to adapt to an increasingly complex global economic environment. Today’s rate cut by the ECB not only aims to address the immediate economic challenges but also to position the euro zone for more stable growth as uncertainties persist in the global financial landscape.