Four interest rate reductions are coming from the ECB

Four reductions up to 2% of 3%, which is today, predicts its design for its next moves within 2025. The first interest rate reduction by 0.25 of the unit will take place at the January meeting and the other three gradually at the next meetings of the European Central Bank which sees inflation decline faster than its forecasts, but slow down the European economy. CORVERSE These are the two critical factors that have so far contributed to the basic design that the ECB has drawn up over the next few months, as European sources of knowledge of the discussions and procedures taking place in Frankfurt on monetary policy formulation. According to the data available to the ECB, inflation is declining at a rate of 0.2%, faster than initial forecasts. This means that the 2% inflation target is expected to be achieved faster than initial estimates. Thus the “green light” for the next moves on the monetary policy front that will give breath to the European economy and borrowers. However, on the front of the European economy, developments are not encouraging. Indicators for economic activity in the euro area presuppose a slowdown. The biggest problem is focused on Germany where growth rates remain weak at levels slightly above zero, while France is faced with low growth rates and with its ever-increasing public debt. In the light of these data, it is estimated that the reduction in interest rates and the cheapest loan money will be an antidote to the current threat and catalyst of positive developments on these two fronts affecting the entire eurozone. The key scenario for the ECB’s next moves does not include any negative developments in the event that the US President-elect D. Trump’s announcements to impose duties on European products are actually implemented. In this case, European factors say, the ECB is expected to move more decisively to prevent risks. That is why Frankfurt, like the governments of the eurozone member countries, are holding a waiting position until the first announcements of the new US president on January 20th. In any case, as the same factors confirm, the ECB will take action with all the weapons it has in its quiver to prevent risks. Similar action had been taken by the ECB both in the debt crisis of the past decade and in the Coronavirus period providing cheap money to boost liquidity in the market and the European economy. Source: RES – ICM