Further Interest Rate Cut in Euroland – Currency Thoughts
Further Interest Rate Cut in Euroland
April 18, 2025
All three major interest rates at the European Central Bank were indeed cut yesterday morning by the expected 25 basis points, resulting in a cumulative decline of the deposit rate since last June to 175 basis points to 2.25% and 210 bps to 2.40% in the central bank refinancing rate. In justifying today’s move, note was made that total, core and service-sector inflation continue to recede. Wage growth is also moderating, and “the outlook for growth has deteriorated owing to rising trade tensions,” which are weighing on the confidence of both consumers and the business community and which also elicited tighter financing conditions. Forward policy guidance from the Governing Council continued to stress the meeting-t0-meeting nature and data dependence of rate normalization. As for Trump’s remark, it should be noted that Euroland has experienced much weaker growth than the U.S. and hence is much more assured of reestablishing in-target inflation on a sustainable basis.
Copyright 2025, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: European Central Bank
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