ECB Navigates Economic Turbulence with Rate Cuts

The European Central Bank (ECB) has cut interest rates for the fourth time, prompted by political instability and the threat of US trade wars. With inflation conditions easing, but domestic inflation still high, further rate cuts are anticipated to support sluggish economic growth.

The European Central Bank (ECB) cut interest rates for the fourth time this year, a quarter percentage point reduction, amid looming political instability and potential US trade wars affecting economic growth.

As inflation worries decrease, the ECB is now deliberating if rate cuts are sufficient for the languishing economy. Predicting a return to its 2% inflation target by early 2025, the ECB adjusted its deposit rate from 3.25% to 3%, hinting at possible additional cuts.

Christine Lagarde, ECB President, suggested the disinflation process is progressing and adjustments are aimed toward a neutral setting, yet domestic inflation remains a concern. While some economist voices push for rapid rate reductions, the ECB focuses on maintaining economic stability amidst geopolitical risks.

(With inputs from agencies.)