The European Central Bank (ECB) recently announced a reduction of its main interest rate by 0.25%, bringing it down to 3.25%. This decision marks the third rate cut this year as inflation in the eurozone continues to decrease.

ECB Interest Rate Reduction

Annual inflation in the eurozone fell to 1.7% in September, its lowest level in over three years. This decline in inflation is largely due to the decrease in energy costs, which fell by 6.1% compared to the previous year. In response to this trend, the ECB decided to reduce borrowing costs to support economic growth in the region.

Stimulating Economic Activity

The ECB’s decision comes amidst an economic slowdown in the eurozone. According to the institution’s forecasts, economic growth is expected to slow to 0.2% in the third quarter and 0.8% for the entire year 2024. By lowering interest rates, the ECB hopes to stimulate economic activity and encourage investments.

Impact on Eurozone Economy

The ECB emphasizes that this decision is based on an updated assessment of inflation prospects and the underlying dynamics of inflation. The institution remains determined to bring inflation back to its 2% target in the medium term and will continue to adjust its monetary policy based on incoming economic and financial data.

The interest rate reduction by the ECB to 3.25% reflects a strategy aimed at supporting economic growth in a low-inflation environment. This measure should help stabilize the eurozone economy and encourage investments while maintaining strict control over inflation.