Photo: Collected
With inflation slowing and the economic outlook darkening, the European Central Bank is expected to cut interest rates again Thursday but is unlikely to give much away about its next moves.
After raising rates at a record pace from mid-2022 to tackle surging consumer prices, the ECB has begun to ease the pressure as inflation rates have fallen.
The Frankfurt-based central bank made its first cut in June, reducing the key deposit rate to 3.75 percent from a record high of four percent.
The ECB's governing council kept borrowing costs on hold in July but is expected to make another quarter-point cut on Thursday, providing further relief to businesses and households.
It will be only the second rate reduction since 2019 from the ECB, which sets monetary policy for the 20 countries that use the euro.
"Virtually all recent ECB speakers have confirmed that they would like to lower rates," said Berenberg bank economist Holger Schmieding.
Policymakers' confidence in moving ahead with cuts has been bolstered by signs that inflation, which has been bumpy over the past year, is now on a more sustained downward trajectory.
Eurozone inflation fell to its lowest level in more than three years in August, according to official data.
Consumer price rises slowed to 2.2 percent compared to the same month last year, down from 2.6 percent in July, leaving the figure just a whisker off the ECB's target.
Inflation rates had peaked at 10.6 percent in October 2022 after Russia's invasion of Ukraine and post-pandemic supply chain woes sent food and energy costs soaring.
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