The European Central Bank (ECB) has decided to cut benchmark rates by 25 basis points. The ECB reaffirmed its expectations on inflation stating headline that inflation will average 2.5% in 2024, 2.2% in 2025 and 1.9% in 2026. Core inflation is anticipated to decline from 2.9% this year to 2.3% in 2025 and 2.0% in 2026.
The ECB also noted that it continues to reduce it Asset Purcahse Program and Pandemic Emergency Purchase Program.
The ECB Governing Council sated that it is ready to adjust its posture as it seeks to return inflation to its 2% target over the medium term and to preserve the smooth functioning of monetary policy transmission.
The decision by the ECB foreshadows an expected move by the US Federal Reserve to announce a rate cut next week. Currently, expectations are for the Fed to cut by 25 bps with some observers seeing a 50 bps cut.
