Eurozone economy: ECB cuts rates and revises inflation forecasts

The European Central Bank has cut interest rates again to stimulate the economy and control inflation approaching the 2% target. The rate on bank deposits was reduced to 3% from 3.25%, which was the fourth decrease this year. Basic and marginal lending rates were also reduced.

In addition, the ECB revised the forecast for eurozone GDP growth for 2024 to 0.7% from 0.8% expected in September. Forecasts for 2025 dropped to 1.1% from 1.3%, and for 2026 to 1.4% from 1.5%, indicating a slower economic recovery.

Inflation forecasts for the coming years were also slightly lowered. Consumer inflation is expected to reach 2.4% this year, 2.1% in 2025, and remain at 1.9% in 2026. Inflation is projected at 2.1% in 2027, due to the introduction of a new emissions trading system in the EU.

Core inflation, excluding energy and food prices, is expected to reach 2.9% in 2024 and 2.3% in 2025, in line with previous forecasts. For 2026, the forecast was slightly lowered to 1.9%, and 1.9% is expected in 2027.