The European Central Bank lowered its key interest rates by 25 basis points on Thursday, bringing the deposit facility rate to 2.75%, as the disinflation process remains “well on track” while the economy showed an unexpected stagnation during the last quarter of the year.
With the ECB’s latest rate cut, the interest rate gap between the U.S. and the eurozone has widened now to 175 basis points, as the Federal Reserve opted to hold its benchmark rate steady at a 4.50% upper bound on Wednesday.
Economy Remains Weak, Lagarde Points To Further Easing Ahead
The eurozone economy stagnated in the fourth quarter 2024, according to Eurostat’s preliminary flash estimate, and is expected to remain sluggish in the near term.
Financing conditions remain tight as the effects of past rate hikes continue to filter through the economy, with some loans still being rolled over at higher rates.
“We are currently restrictive. We are …
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