The European Central Bank (ECB) cut borrowing costs after data showed the bloc’s inflation rate fell to its lowest in three years, according to AP News.
The bank’s rate-setting council cut the benchmark rate to 3.25 per cent from 3.5 per cent at a meeting in Ljubljana, Slovenia. The cut is the third one since June and shows optimism about inflation dynamics. It fell to 1.8 per cent in September, dropping below the ECB’s target of 2 per cent.
Inflation was falling harder than expected, with analysts believing the bank would cut rates in December as well. Growing evidence that the eurozone is barely growing has only reinforced the view that ECB President Christine Lagarde will not try to dispel such expectations.
One of the reasons inflation fell globally was that central banks sharply increased borrowing costs during the coronavirus pandemic. Then prices started to skyrocket, first because of supply chain problems and then due to the war in Ukraine, which drove up energy prices.
The ECB began raising interest rates in the summer of 2021, raising them to a record 4 per cent in September 2023 to bring inflation under control.
