The European Central Bank (ECB) is leaving the record interest rate at 4 percent for now. For the first time in a long time, interest rates were not increased to offset rising prices in the euro area. The ECB is putting on the brakes because inflation fell “significantly” in September.
The Central Bank has already stated that interest rates will not increase further. The interest rate cut was not open to discussion. The ECB continues to expect inflation to remain very high for a very long time and aims to reduce inflation to around 2 percent. Inflation in the Eurozone was 4.3 percent in September.
After the ECB raised the interest rate from zero to 0.75 percent in September last year, the same interest rate has risen sharply at every ECB meeting. A record level of 4 percent was reached in September this year.
The ECB says higher interest rates are now having a “strong impact” on borrowing conditions in the euro zone. “This gradually reduces demand and therefore helps reduce inflation.”
Source: NOS
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.
