{"id":90683,"date":"2024-10-20T00:00:00","date_gmt":"2024-10-20T00:00:00","guid":{"rendered":"https:\/\/enterpriseam.com\/ksa\/2024\/10\/20\/ecb-trims-interest-rate-for-third-time-amid-cooling-inflation\/"},"modified":"2024-10-20T00:00:00","modified_gmt":"2024-10-20T00:00:00","slug":"ecb-trims-interest-rate-for-third-time-amid-cooling-inflation","status":"publish","type":"post","link":"https:\/\/enterpriseam.com\/ksa\/2024\/10\/20\/ecb-trims-interest-rate-for-third-time-amid-cooling-inflation\/","title":{"rendered":"ECB trims interest rate for third time amid cooling inflation"},"content":{"rendered":"

The <\/strong>European Central Bank (ECB) lowered interest rates for the third time this year<\/strong>, cutting its key deposit rate by 25 bps to 3.25%. The ECB said<\/a> the move aims to curb potential for \u201cdownside surprises\u201d in the eurozone economy. The move is the bank\u2019s first back-to-back rate cut in 13 years, five weeks after a previous rate cut. <\/p>\n

The context:<\/strong> Inflation dropped below the eurozone\u2019s 2% target to 1.7% in September, its lowest level in three years.<\/p>\n

REMEMBER- <\/strong>Central banks are pivoting toward cutting rates<\/a> as inflation slows down, with the US Federal Reserve spearheading the global policy-easing cycle, cutting interest rates by half a percentage point in September<\/a>.<\/p>\n

The rate cut is expected to spur growth for the region<\/strong> by giving \u201ca boost to the German [and wider eurozone] economy, inspiring consumer spending, encouraging investment, and ultimately stimulating the economy,\u201d Joe Nellis, an adviser to the financial consultancy MHA, told The Guardian<\/a>. Germany, the region\u2019s largest economy, faces the risk of a second year of contraction.<\/p>\n

If inflation remains on its downward slide, an aggressive cut could be on the table.<\/strong> \u201cA 50 bps cut at the next meeting in December is a possibility if the two inflation and PMI prints of October and November continue to surprise on the downside,\u201d said<\/a> Douglas Lytle, an editor at Bloomberg Intelligence. <\/p>\n

ECB president Christine Lagarde <\/strong>signaled<\/a><\/strong> that the bank is unlikely to stick to \u201ca <\/strong>particular rate path,\u201d <\/strong>only keeping rates \u201csufficiently restrictive for as long as necessary\u201d to achieve its 2% target.<\/p>\n

Some pundits concur<\/strong>, seeing as the ECB \u201cwill likely want to keep flexibility about a December cut and will push back against the idea that this is the start of consecutive cuts,\u201d ING said in a note<\/a> ahead of the decision.<\/p>\n

ALSO WORTH NOTING-<\/strong><\/p>\n