ECB Likely to Cut Interest Rates in December

Yannis Stournaras, Governor of the Bank of Greece and ECB Governing Council member, confidently predicts a 0.25% interest rate cut by the European Central Bank (ECB) at its upcoming December meeting, describing it as an 'optimal reduction'. He emphasized that while this cut is likely, the ECB still has a long way to go in reaching the neutral rate, with multiple cuts anticipated if inflation continues to decline. Stournaras also noted a positive revision in inflation expectations, suggesting the ECB could achieve its 2% target sustainably by early to mid-2025. However, he warned that external factors, such as potential tariffs from the U.S., could negatively impact the European economy and introduce inflationary volatility. The ECB has already cut rates three times since June, and the upcoming decision marks a crucial point in its monetary policy direction.