Signs are emerging that the European Central Bank will soon cut eurozone interest rates again, as plummeting growth prospects and tumbling inflation clear the way for a sustained loosening of monetary policy.
Little more than two weeks after it slashed its main policy rate by half a percentage point to 3.75% as part of coordinated global central bank action, policymakers at the notoriously inflation-sensitive ECB are making bolder signals that further reductions are possible.
Evidence of slower growth and falling price pressures was 'a new element of our analysis', José Manuel González-Páramo, an ECB executive board member, told an Irish newspaper. The ECB could “diminish rates without adding to inflationary risks in the medium term”, he said.
Financial Times, The Times