Attention borrowers: According to the experts from the European Central Bank (ECB), the ECB must further reduce interest rates in order not to delay the economy.
The economists estimate that the ECB must lower its most important interest rate by 0.25 percentage points until the upper end of the range of the neutral interest rate has been reached. According to new calculations from the ECB experts, the neutral interest rate is between 1.75 and 2.25 percent.
The neutral interest is a theoretical value in which the economy is neither heated or cooled and inflation remains stable. The neutral interest rate cannot be measured immediately, experts appreciate it using calculations. It is not a benchmark for a suitable monetary policy course.
Lagarde announced further interest rate reductions
The main interest in the euro area is currently 2.75 percent. The ECB only lowered the most important interest at the end of January for the fifth time since June 2024. The ECB president Christine Lagarde said in a press conference that the ECB would continue the downward course.
Borrowers can look forward to this: If interest rates fall, banks can borrow money from the ECB cheaper. The banks often pass on these savings to their customers. This makes loans cheaper.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
