ECB cuts rates again as inflation nears 2% and growth remains weak!
As analysts had predicted, the ECB cut interest rates on Thursday afternoon during its January meeting. As a result, the interest rates on the deposit facility, main refinancing operations and marginal lending facility will be cut to 2.75%, 2.90% and 3.15% respectively, with effect from 5 February 2025.
The interest rate on the main refinancing operations is the rate that banks pay when they borrow from the ECB for one week, while the deposit facility rate is what banks can use to make overnight deposits in the Eurosystem. The marginal lending rate provides overnight credit to banks from the Eurosystem.
"The Governing Council is committed to ensuring that inflation is sustainably stabilised at its medium-term objective of 2%. It will follow a data-dependent and meeting-by-meeting approach to determining the appropriate stance of monetary policy. In particular, the Governing Council's interest rate decisions will be based on its assessment of the inflation outlook in the light of incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy. Policy transmission The Governing Council is not committing itself in advance to a particular rate path," the ECB said in a statement.
The ECB's latest monetary policy decision comes after the eurozone economy stalled in the fourth quarter of 2024, according to earlier preliminary data from Eurostat, with Germany and France, the bloc's two largest economies, recording worse-than-expected contractions.
Eurozone gross domestic product (GDP) was unchanged from the previous quarter, a sharp slowdown from the 0.4% growth recorded in the third quarter and below analysts' forecast of 0.1% expansion. It marks the weakest performance since the fourth quarter of 2023.
For the wider European Union (EU), GDP grew by 0.1% quarter-on-quarter. On an annual basis, seasonally adjusted GDP grew by 0.9% in the euro area and 1.1% in the EU, improving slightly from the previous quarter's readings of 0.9% and 1.0%, respectively.
The biggest drag on growth came from Germany and France, both of which unexpectedly contracted. Germany’s economy shrank by 0.2%, worse than the 0.1% decline expected, while France’s GDP fell by 0.1%, missing expectations of stagnation. Meanwhile, Italy’s economy remained flat for the second quarter in a row, defying forecasts for modest growth of 0.1%.
On the other hand, some peripheral economies fared better, with Portugal (+1.5%) leading the growth rankings, followed by Lithuania (+0.9%) and Spain (+0.8%). The weakest performances were recorded in Ireland (-1.3%), Germany (-0.2%) and France (-0.1%).
Weaker-than-expected GDP figures strengthened expectations that the ECB would cut interest rates at its policy meeting today.
Poll

Denmark, in defense of Greenland - 2 billion euros to increase military presence in the Arctic
Denmark will increase its military presence in the Arctic region, investing around 2 billion euros to defend the territory. The decision comes after tensions......

Germany, pessimistic about the future - Reduces forecast for economic growth in 2025
Germany has cut its economic growth forecast for this year to 0.3%. The German economy has faced major challenges in recent years, affected by global crises......

Road axis, Fier-Patos Turn-Fratar, Balluku inspects the works!
The Minister of Infrastructure and Energy, Belinda Balluku, inspected today the work for the rehabilitation of the road axis, Fier-Kthesa e Patosit-Fratar,......

Spain, with the strongest economic growth in the eurozone - Tourism, agriculture and exports fueled expansion in 2024
Spain had the strongest economic growth in the eurozone in 2024, exceeding the Central Bank's expectations. The rapid growth was helped by tourism, the......

Electricity, "key" to reducing gases - Energy Community seeks additional mechanisms to accelerate transition
The Energy Community Secretariat calls for the inclusion of additional mechanisms to accelerate the energy transition in all member states, including......

How will suspicious transactions be tracked? - Cases when reported/ Banks and currency exchange points create risk profiles for customers
Banking and non-banking institutions, savings and credit societies or currency exchange points are obliged to track and report any suspicious transactions.......

Energy, few offers from private suppliers - ERE has imposed the obligation, but only 4 companies have become part of the platform
All electricity suppliers are required to publish their offers on the Price Comparison Platform, set up by the Energy Regulatory Authority. However, despite......

Gazheli: Customs, risk analysis with artificial intelligence - American Chamber organizes business forum for entrepreneurship 2025
The American Chamber organized a business forum focusing on customs procedures and entrepreneurship 2025. Some of the issues raised at this forum were the......