{"id":67079,"date":"2024-06-06T13:17:03","date_gmt":"2024-06-06T13:17:03","guid":{"rendered":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/06\/06\/european-central-bank-cuts-interest-rates-for-first-time-since-2019\/"},"modified":"2024-06-06T13:17:03","modified_gmt":"2024-06-06T13:17:03","slug":"european-central-bank-cuts-interest-rates-for-first-time-since-2019","status":"publish","type":"post","link":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/06\/06\/european-central-bank-cuts-interest-rates-for-first-time-since-2019\/","title":{"rendered":"European Central Bank Cuts Interest Rates for First Time Since 2019"},"content":{"rendered":"<div style=\"text-align:center\"><img loading=\"lazy\" decoding=\"async\" width=\"1050\" height=\"550\" src=\"https:\/\/i1.wp.com\/static01.nyt.com\/images\/2024\/06\/06\/business\/06ecb-rate-promo-NEW\/06ecb-rate-promo-NEW-facebookJumbo.png?fit=1050,550&amp;ssl=1\" class=\"attachment-post-thumbnail size-post-thumbnail wp-post-image\" alt=\"European Central Bank Cuts Interest Rates for First Time Since 2019\" title=\"European Central Bank Cuts Interest Rates for First Time Since 2019\" \/><\/div><p> <br \/>\n<\/p>\n<div>\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">The European Central Bank lowered interest rates on Thursday for the first time in nearly five years, signaling the end of its aggressive policy to stamp out a surge in inflation.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">As inflation returned within sight of the bank\u2019s 2 percent target, officials cut their three key interest rates, which apply across all 20 countries that use the euro. The benchmark deposit rate was lowered to 3.75 percent from 4 percent, the highest in the bank\u2019s 26-year history and where the rate had been set since September.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cThe inflation outlook has improved markedly,\u201d policymakers said in a statement on Thursday. \u201cIt is now appropriate to moderate the degree of monetary policy restriction.\u201d<\/p>\n<p class=\"css-at9mc1 evys1bk0\">There is growing evidence around the world that policymakers believe high interest rates have been effective at restraining economies to slow inflation. Now, they are lowering rates, which could provide some relief to businesses and households by making it cheaper to obtain loans.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div>\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">\u201cMonetary policy has kept financing conditions restrictive,\u201d policymakers said. \u201cBy dampening demand and keeping inflation expectations well anchored, this has made a major contribution to bringing inflation back down.\u201d<\/p>\n<p class=\"css-at9mc1 evys1bk0\">On Wednesday, the Bank of Canada became the first Group of 7 central bank to cut rates. Central banks in Switzerland and Sweden also cut rates recently.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">There is more caution in the United States, where officials at the Federal Reserve are waiting to be more confident that a recent run of stubborn inflation readings will end. The Bank of England has opened the door for rate cuts, with some officials saying rates could be lowered this summer.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The E.C.B.\u2019s rate cut on Thursday, the first since September 2019, sends a strong signal that the worst of Europe\u2019s inflation crisis is firmly in the rearview mirror. In late 2022, average inflation across the eurozone peaked above 10 percent as a surge in energy prices fed through to consumer goods and services, and workers demanded higher wages to blunt the pain of the jump in prices.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">In recent years, the E.C.B. embarked on its most aggressive cycle of rate increases. Policymakers lifted the deposit rate, which is what banks receive for depositing money with the central bank overnight, to 4 percent last September, from negative-0.5 percent in July 2022.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div>\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">Inflation in the eurozone slowed to 2.6 percent in May. For most of the past year, lower energy prices have helped pull down inflation. Food inflation has slowed to below 3 percent, from more than 12 percent a year ago.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">On Thursday, Europe\u2019s benchmark stock index climbed to a record high before the rate cut was announced, but erased some of its gains amid signs that the bank would be cautious about future rate cuts.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The central bank warned that there were still signs of strong price pressures, which would mean inflation would stay above the 2 percent target \u201cwell into next year.\u201d The overall inflation rate is forecast to average 2.2 percent next year, above the bank\u2019s projection three months ago.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Officials are facing a challenging balancing act. On the one hand, policymakers want to cut interest rates in a timely manner so that high rates do not cause excessive damage to the economy that could see inflation fall below their target. On the other hand, they do not want to ease policy too soon, which could cause inflationary pressures to revive.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">On Thursday, the E.C.B.\u2019s staff forecast that the eurozone economy would grow 0.9 percent this year, lifting the forecast from 0.6 percent three months ago.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div>\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">Christine Lagarde, the president of E.C.B., will give a news conference later in Frankfurt, and investors and analysts will be listening closely for clues about the future pace of rate cuts.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cThe governing council is not precommitting to a particular rate path,\u201d the bank said in the statement.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<p><br \/>\n<br \/><a href=\"https:\/\/www.nytimes.com\/2024\/06\/06\/business\/european-central-bank-interest-rates.html\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The European Central Bank lowered interest rates on Thursday for the first time in nearly five years, signaling the end of its aggressive policy to stamp out a surge in inflation. As inflation returned within sight of the bank\u2019s 2 percent target, officials cut their three key interest rates, which apply across all 20 countries [&hellip;]<\/p>\n","protected":false},"author":2,"featured_media":67080,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"tdm_status":"","tdm_grid_status":"","fifu_image_url":"https:\/\/static01.nyt.com\/images\/2024\/06\/06\/business\/06ecb-rate-promo-NEW\/06ecb-rate-promo-NEW-facebookJumbo.png","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[673,3905,1492,10890,1120,6829,222],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/67079"}],"collection":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/comments?post=67079"}],"version-history":[{"count":1,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/67079\/revisions"}],"predecessor-version":[{"id":67081,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/67079\/revisions\/67081"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/media\/67080"}],"wp:attachment":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/media?parent=67079"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/categories?post=67079"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/tags?post=67079"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}