The News
The European Central Bank cut interest rates by a quarter of a percentage point Thursday, the fifth time it has lowered borrowing costs since last summer, as policymakers attempt to revive flatlining economic growth in the bloc.
Despite inflation in the EU remaining above the central bank’s target, policymakers have sought to prioritize growth by committing to lower interest rates for longer.
France’s GDP grew just 1% last year, while Germany, the EU’s biggest economy, didn’t grow at all. A report by the EU’s statistical agency Eurostat published Thursday showed zero growth in the eurozone economy in the fourth quarter of 2024, compared with the three months before.
The ECB’s cut took the headline interest rate to its lowest level since early 2023, and came one day after the US Federal Reserve kept rates on hold, despite President Donald Trump’s calls to reduce borrowing costs.
Trump’s inauguration as US president has heightened growth concerns in Europe: European leaders fear the White House could impose tariffs in a bid to redress a widening trade deficit. “The data paint an unfavourable picture for the euro area,” The Economist reported.
