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I confirm my intention to proceed and enter this websiteThe European Central Bank (ECB) lowered its benchmark interest rate by 25 basis points to 3% on Thursday, a decision widely anticipated by markets. This marks the fourth-rate reduction in 2024, with the central bank hinting at the potential for additional cuts as inflation nears its target and economic growth remains sluggish. In response, the euro declined 0.28% against the U.S. dollar, settling at 1.0466 by the close.
(EUR/USD Daily Price Chart, Source: Trading View)
“Borrowing conditions are improving as recent rate cuts by the Governing Council only gradually lower the financing costs of households and firms,” the ECB said. It acknowledged that overall conditions remain restrained given the restrictive monetary policy stance and the lagged effect of past rate increases on outstanding loans. There is no consensus on the threshold for restrictive rates, but economists consider neutral rates-neither fostering nor hindering growth-to lie between 2% and 2.5%.
In addition, the ECB cut the one-week loan rate to 3.15% and the overnight lending rate to 3.40%. These tools have been little used in recent years, however, since the ECB’s extensive bond-buying programs and long-term loans have left the banking system flush with excess reserves.
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