The News
The European Central Bank cut its headline interest rates for the third time this year on Thursday as inflation dropped below the bank’s 2% target.
The key deposit rate was reduced by a quarter point to 3.25%, with the bank saying it was cutting rates because “we are well on track to reach our inflation goal.”
Just a few weeks ago, the ECB’s back-to-back rate cuts seemed unlikely, as policymakers warned of high inflation in parts of the economy. But the eurozone’s inflation rate fell further than expected in September, reaching below 2% for the first time since 2021. The ECB said that “inflation is expected to rise in the coming months, before declining to target in the course of next year.”
Last month, the ECB cut its growth forecast for 2024, as some of Europe’s biggest economies, including Germany and France, stagnate. “The economy is in desperate need of stimulus, and the ECB will be hoping this third rate cut will begin to make a difference,” an investment strategist at Quilter Investors told CNBC.