$EUINTR -Europe's Interest Rates (December/2024)

EUINTR
(December/2024)
source: European Central Bank


The European Central Bank (ECB) has decided to cut its key interest rates for the fourth time this year by 25 bps in December 2024, as expected.
This move reflects a more favorable inflation outlook and improvements in monetary policy transmission.
Inflation is expected to gradually decrease, with forecasts of 2.4% in 2024, 2.1% in 2025, and 1.9% in 2026.
Core inflation, excluding energy and food, is also expected to fall, with a target of 2% in the medium term.
Despite easing financing conditions due to the rate cuts, borrowing costs remain tight due to previous hikes still affecting existing loans.
Economic recovery is projected to be slower than before, with growth expected at 0.7% in 2024, 1.1% in 2025, and 1.4% in 2026.
The ECB remains focused on ensuring inflation returns to its 2% target and will adjust its policies based on incoming data, without committing to a fixed rate path.