The European Central Bank has reduced interest rates five times in a row on Thursday, as local economic growth is slow.
Policy proprieters have reduced bank key rates from a quarter to 2.75 %, as inflation remained relatively close to the 2 % target. This movement will take place the day after the US and Europe's economic prospects branches.
“The growth process is proceeding smoothly,” said Christine Lagard, president of the European Central Bank, said on Thursday that inflation would return to his goal this year.
The annual inflation rate in the euro area was 2.4 % in December, which was slightly higher than the previous month due to the rise in energy prices.
Central Bank's policy creators have a different perspective on inflation. Some people emphasize signs of sustainable inflation pressure, such as increasing the price of a service sector that stubbornly holds about 4 %. Others, including the bank, Philip R. Lane, states that if the borrowing cost is too long, it may decrease if it expands too much. But the decision to reduce Thursday fees was unanimous, Lagardo said.
She added that the euro economy is expected to be weak in the short term. Earlier that day, it was shown that the data stagnated in the fourth quarter of last year, stagnating by 0.4 % in the previous quarter.
Unexpected sluggishness has put pressure on the central bank officials to reduce interest rates, suffered from the declining competitiveness between the United States and China, and the economic growth in the region is very vulnerable to trade turmoil. It helps to create. The biggest German economy of the block has been compressing companies and consumers in the past two years, and political uncertainty has worsened the problem prior to the next month's election. It has been shrinking for the past two years.
However, central bank officials have stated that the government needs to make business and investment easier through borders, and does not rely on monetary policy to stimulate economic growth.
The Central Bank is the worst in the recent inflation crisis behind them, but they are facing new economic risks, especially Trump's tariff threats. If tariffs are collected and the state retaliation, trade wars may be confused throughout the world economy and shake prices.
Last year, both the US Federal Preparatory System and the European Central Bank were fully reduced. Now their path is branching.
Traders expect the Euro -zone central banks to reduce their fees at most of the first half of this year.
However, the Central Bank of the United States is expected to reduce interest rates this year, despite the fact that President Trump has called for a low price because the economy is resilient and the labor market is powerful. No. Trump's policy, such as reducing immigrants and increasing import duties, can worsen inflation pressure at home.
The uncertainty about these policies and the potential impact on overseas inflation make it more difficult for the Central Bank to indicate something that may come next.
So far, Europe was not a central focus of Trump's plan to increase tariffs. However, the feeling of how destructive such an event is from Canada on Wednesday is facing a 25 % tariff threat. The Central Bank in Canada reduced interest rates and was waiting for Mr. Trump to confirm whether Trump would proceed with the proposed tariff, which reduced the guidance.
Lagardo has repeatedly made a decision at the European Central Bank and not committed to interest rates.
“It's completely unrealistic for those who want to have this solid advanced guidance,” she said. “It's simply because we are important at this time, probably facing an increase in uncertainty.”
