Interest Rate Reduction
The (ECB) lowered its benchmark rate from 3.5% to 3.25%, marking the third cut this year, in response to inflation falling to 1.8% and economic growth stagnating at 0.3%.
This decision, made during a meeting in , , signals optimism among rate-setters regarding the inflation trajectory, with expectations for another rate cut in December.
Economic Outlook and Policy Debate
The ECB's Governing Council described the process of disinflation as "well on track," adjusting its inflation forecasts and acknowledging recent economic activity indicators fell short of expectations.
Despite the rate cuts, there is an ongoing debate within the ECB regarding the pace of future easing, with some policymakers advocating for a cautious approach due to lingering inflation risks.