ECB Cuts Interest Rates to Stimulate Economy

The European Central Bank (ECB) has cut interest rates for the fourth time this year, reducing its key rate to 3% in an effort to bolster a sluggish eurozone economy. The ECB has revised its growth forecasts downward, now expecting GDP to grow by only 0.7% in 2024, with modest increases to 1.1% in 2025 and 1.4% in 2026. Inflation is predicted to stabilize around the ECB's 2% target by 2025, with core inflation projected at 1.9% in 2026 and 2027. Despite the rate cuts, the ECB maintains a cautious, data-dependent approach regarding future monetary policy adjustments. The recent economic projections indicate a reliance on rising real incomes and gradual business investment to support growth, amidst ongoing political uncertainties in Europe. ECB President Christine Lagarde and other officials are under pressure to navigate these economic challenges while keeping inflation in check.