The European Central Bank cut interest rates as expected on Thursday and left the option for more easing open. It maintained that inflation in the euro zone is mostly under control, despite concerns about global trade.
ECB Cuts Rate To 2.75%
The European Central Bank made its fifth rate cut since June, lowering the deposit rate from 3.0% to 2.75%. Despite some signs of recovery in recent surveys, the euro zone economy remains weak, and inflation is still slightly above the ECB’s 2% target. This economic situation made the rate cut necessary to support growth and keep inflation under control. “The disinflation process is well on track,” noted the ECB.
The ECB noted that inflation is still high because wages and prices are adjusting slowly after the past inflation surge. However, wage growth is slowing down as anticipated, and company profits are helping to reduce the impact of inflation.
Policymakers Relieved
Besides, the policymakers were likely relieved after U.S. President Donald Trump’s new administration didn’t impose the feared blanket trade tariffs. However, his threats continue to cast a shadow over the economic outlook. Tariffs often weaken economic growth, and if countries respond with their own tariffs, it can drive up inflation. This could complicate the ECB’s plans to ease interest rates.
Bitcoin Won’t Enter EU Reserves
Besides, the European Central Bank President Christine Lagarde said that she was confident that Bitcoin would not enter reserves in the European Union when she was asked of her confidence on the inflation target, and about a strategic bitcoin reserve.
She says that bitcoin is plagued by the suspicion of money laundering and other criminal activity. “I am confident that bitcoins will not enter the reserves of any of the central banks of the members of the general council,” she noted.
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