For the fourth time in 2024.. the European Central Bank reduces interest rates
The European Central Bank announced on Thursday that it reduced interest rates for the fourth time this year, by a quarter of a percentage point to 3%.
The decision to reduce interest rates comes at a time when the inflation rate has become less of a concern among the twenty countries of the single European currency area.
This is with the cost of living rising by 2.3% on an annual basis last November.
But there are other more worrying data, as the euro zone economy recorded growth of 0.4% during the third quarter of the year.
This is a better rate than many feared, but still far from ideal.
Political and financial unrest
Germany, the largest economy in Europe, is a source of great concern, as it suffers from recession as it heads towards holding early elections.
The political and financial turmoil rocking France, which has no government or budget for 2025, is also worrying European policymakers.
There is also the possibility of a trade war with Washington under the next administration of US President-elect Donald Trump.
Decline in the cost of borrowing money
Lowering interest rates makes it less expensive to borrow money, which can stimulate spending by businesses and consumers.
In addition to reducing key interest rates, the European Central Bank also decided to reduce key refinancing operations by a quarter of a point, to 3.15%.
Marginal lending was also reduced by a quarter point to 3.4%.
The battle against high inflation
European Central Bank President Christine Lagarde said that the bank’s battle against high inflation is nearing its end, but it has not yet won a final victory.
Bloomberg News Agency quoted Lagarde as saying before the European Parliament in Brussels: “Our battle against inflation is nearing completion, but it is not complete, and the mission is not yet accomplished. We still have a lot of work to do, but we are approaching the goal, and this means that we are beginning to look to the future.” “More than we did in the last two years.”
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