ECB cuts rates for third time in push for “soft landing”
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The news: The European Central Bank cut interest rates for the third time this year, lowering the deposit rate by a quarter point to 3.25%, as predicted by analysts.
The numbers: It is the first back-to-back rate cut in 13 years, reflecting concerns over the eurozone's weakening economy.
Inflation dropped to 1.7% in September, below the ECB’s target of 2%, trigger in a shift in focus from taming inflation to supporting growth.
The context: ECB President Christine Lagarde said a recession is not expected and that the central bank is still aiming for a “soft landing” for the economy.
However, the economic outlook remains challenging, with weak industrial output, falling business confidence, and risks from geopolitical tensions. Analysts expect further rate cuts in the coming months.
What they said: "We believe the disinflationary process is well on track and all the information we received in the last five weeks were heading in the same direction - lower," ECB President Christine Lagarde told a press conference.
“We are still looking at that soft landing,” she said while warning that “lower confidence could prevent consumption and investment from recovering as fast as expected.”
Asked about the prospect of higher tariffs on European goods if Donald Trump wins the US election next month, Lagarde said any trade obstacles were a "downside" for Europe.
The sources: ECB statement , Reuters , Bloomberg
