The European Central Bank is universally expected to cut interest rates for the Euro area this week.
Cutting back on interest rates for the first time in two decades can be seen as a positive sign for the dwindling European economy, which has been hit by slow growth and poor demographic patterns.
Average inflation in Euro area countries has been mostly on a downward trend since last year, reaching an annual 2.4% in both March and April, down from a peak of 10.6% in October 2022.
The measure, however, is very dynamic within the block, with figures as low as 0.4% for Lithuania and as high as 4.9% in Belgium.
The ECB commenced its latest rate hike cycle in July 2022. Key ECB interest rates, the European counterpart for the federal funds rate, was hiked a total of 10 times and now stands at 4%. The same rate has been kept steady since September of last year.
June's cut will bring the rate down by 25 basis points to a floor of 3.75%.
Yet the steady pace towards the ideal measure of 2% annual inflation might be hitting a roadblock this month, as Eurostat, the block's main statistics office, is estimatfing that May's inflation has gone up to 2.6%, above estimates of 2.5%.
If the measure is confirmed, it won’t interfere with plans to lower interest rates. It might influence a decision by the ECB to ...Full story available on Benzinga.com
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