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As widely expected, the European Central Bank (ECB) ๐ฐ๐๐ ๐ถ๐ป๐๐ฒ๐ฟ๐ฒ๐๐ ๐ฟ๐ฎ๐๐ฒ๐ ๐ฏ๐ ๐ฎ๐ฑ ๐ฏ๐ฎ๐๐ถ๐ ๐ฝ๐ผ๐ถ๐ป๐๐ on its three main interest rates, marking the first monetary easing since September 2019. This move follows similar decisions by other central banks, such as those of Switzerland, Sweden, and Canada. It is a first sign of confidence in the determined inflation trajectory. However, President Christine Lagarde warned about the persistence of certain inflationary factors, namely internal pressure on prices and wages.
The ECBโs inflation projections have been revised upwards for this year and next, compared to the March forecasts. ๐๐ป๐ณ๐น๐ฎ๐๐ถ๐ผ๐ป ๐ถ๐ ๐ฒ๐๐๐ถ๐บ๐ฎ๐๐ฒ๐ฑ ๐ฎ๐ ๐ฎ.๐ฑ% ๐ณ๐ผ๐ฟ ๐ฎ๐ฌ๐ฎ๐ฐ, ๐ฎ.๐ฎ% ๐ณ๐ผ๐ฟ ๐ฎ๐ฌ๐ฎ๐ฑ, ๐ฎ๐ป๐ฑ ๐ญ.๐ต% ๐ณ๐ผ๐ฟ ๐ฎ๐ฌ๐ฎ๐ฒ. Core inflation, which excludes more volatile items like energy and food, is projected at 2.8% for this year, 2.2% for 2025, and 2.2% for 2026.
Regarding ๐ฒ๐ฐ๐ผ๐ป๐ผ๐บ๐ถ๐ฐ ๐ด๐ฟ๐ผ๐๐๐ต, ๐๐ต๐ฒ ๐ฝ๐ฟ๐ผ๐ท๐ฒ๐ฐ๐๐ถ๐ผ๐ป ๐ถ๐ ๐ฌ.๐ต% ๐ณ๐ผ๐ฟ ๐ฎ๐ฌ๐ฎ๐ฐ, ๐ญ.๐ฐ% ๐ณ๐ผ๐ฟ ๐ฎ๐ฌ๐ฎ๐ฑ, ๐ฎ๐ป๐ฑ ๐ญ.๐ฒ% ๐ณ๐ผ๐ฟ ๐ฎ๐ฌ๐ฎ๐ฒ. Christine Lagarde, despite this upward revision of inflation for the eurozone, defended that the moderation of restrictive monetary policy since December 2023 allowed inflation to ease by 2.5%. She stated that the new level of interest rates remains sufficiently restrictive for inflation to follow the projected path towards 2%.
When questioned about the timing of future cuts, Lagarde acknowledged uncertainty, stating that any changes would depend on upcoming economic data. This announcement did not generate significant market reactions, with bonds and stocks remaining stable, reflecting market expectations.
Markets maintain the ๐ฝ๐ฟ๐ผ๐ฏ๐ฎ๐ฏ๐ถ๐น๐ถ๐๐ ๐ผ๐ณ ๐๐ต๐ฒ ๐ป๐ฒ๐ ๐ ๐ฟ๐ฎ๐๐ฒ ๐ฐ๐๐ ๐ผ๐ฐ๐ฐ๐๐ฟ๐ฟ๐ถ๐ป๐ด ๐ฎ๐ ๐๐ต๐ฒ ๐ฒ๐ป๐ฑ ๐ผ๐ณ ๐๐๐บ๐บ๐ฒ๐ฟ, that is, by the December meeting. Despite the ECB asserting its independence from its counterparts, it is expected that policies will not diverge significantly.
๐ฐ ๐๐จ๐ฉ๐ฒ๐๐ซ๐๐๐๐ซ ๐ฐ
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The ECB's decision to cut interest rates signals a proactive approach to managing inflation and supporting economic growth in the eurozoneโ but was it too soon?... Show More
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Fri Oct 04 2024 23:59:20 GMT+0000 (Coordinated Universal Time)