Mild Rate Cuts Are Coming From ECB And Fed, Experts Say

With inflation subsiding, the European Central Bank (ECB) is expected to cut interest rates again on Thursday to stimulate weak growth by reducing borrowing costs for companies and home buyers, David McHugh reported.

The ECB will likely proceed cautiously and may only cut rates once more this year.

The U.S. Federal Reserve is also likely to follow suit in the near future. However, experts caution against expecting a rapid series of cuts.

The ECB will likely proceed cautiously and may only cut rates once more this year. While inflation has eased, driven in part by lower oil prices, policymakers remain wary of inflation in the services sector and rising wages as workers try to recover lost purchasing power.

The ECB cut rates in June and paused in July. Its rate-setting council, led by President Christine Lagarde, must balance concerns about weak economic growth—which suggests further cuts—against the need to keep inflation at the 2% target, which might require keeping rates higher for longer. Inflation in the 20 countries that use the euro fell to 2.2% in August, down from a peak of 10.6% in October 2022.