Interest rates in the euro zone. The ECB has made a decision

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Next meetings – in October and December last year. – they did not bring any changes in the level of interest rates for the euro area. Therefore, it seems that the cycle of tightening monetary policy has ended. Therefore, it is not surprising that investors started asking when the first reductions will take place.

According to a survey conducted by , the market expects the first cuts in the euro zone in the second quarter of 2024. 45% of people believe in a scenario in which interest rates will fall in June. experts asked for their opinion. However, 75% of respondents predict that the monetary policy will be loosened in July. economists.

The macroeconomic environment in the Eurozone remains difficult. On the one hand, inflation, which approached the target in November – Eurostat reported the price growth rate at 2.4%. y/y – it rebounded in December. At the end of the year, HICP inflation amounted to 2.9%. However, ECB forecasts show that the inflation target will only be achieved in 2025.

At the same time, eurozone economies stagnated. Retail sales and industrial production were still below the mark in November, while GDP data for Q3 showed 0%. on an annual basis and -0.1 percent counting quarter to quarter.

The situation of Europe’s largest economy is also problematic. Although the GDP data of our western neighbor for 2023 will be released only on January 30, forecasts suggest that last year already pushed Germany into recession.

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