30 January 2025
If you are covering the ECB's decision to cut interest rates to 2.75%, please see the following comment from Richard Carter, head of fixed interest research at Quilter Cheviot:
"The European Central Bank (ECB) has kicked off 2025 with another rate cut – its fifth since last summer – reducing the benchmark interest rate by 0.25% to 2.75%. This move comes as the ECB seeks to address the Eurozone's weak growth.
"With economic growth flatlining, particularly in Germany where its growth forecast has once again been lowered, markets had anticipated that the ECB would continue its path of rate cuts. However, Eurozone inflation rose to 2.4% in December, surpassing the ECB’s 2% goal, dampening hopes for a more substantial 50 basis-point cut. The ECB expects inflation will drop closer to its 2% target throughout the year, with some members even concerned that price pressures could see it fall below this goal.
"Weak consumer confidence continues to weigh heavily on the economy, and there has been a noticeable increase in household savings despite wages continuing to outpace inflation. The economy is in desperate need of stimulus, and the ECB will be hoping that this fifth rate cut will begin to make a difference.
"Today's news will at the very least bring some relief to consumers and businesses, potentially boosting confidence and aiding in the economic recovery."
