The ECB has today lowered the main deposit rate to 3.25% and the refinancing rate to 3.4%, its second cut in just five weeks as the fight against inflation seems to be coming to a close. The ECB is now likely to switch its focus from fighting inflation to its new opponent, fighting weak economic growth.
The cut by the ECB follows today's revised annual inflation numbers for September which came in at 1.7% rather than the 1.8% initial estimate, down from the 2.2% recorded in August. The rate is now meaningfully below the bank's 2% target, indicating a significant shift in the economic landscape.
With Germany currently on the ropes, having seen its GDP contract by 0.1% during the same period, the ECB have swung from the hip, to help stave off any further economic blows. This response highlights the urgency for the central bank to intervene amid economic stagnation.
Only time will tell if the latest medicine will help to heal the economic bruises, stimulate demand and leave the Euro Area ready for another round. There's a critical need for the ECB to not just manage inflation, but also to ensure economic growth.
Collection
[
|
...
]