- The European Central Bank is widely expected to start cutting interest rates from record levels today, Thursday, its first cut in nearly five years, but volatile inflation means the path ahead is uncertain.
- After an unprecedented series of interest rate hikes in the euro zone starting in mid-2022, to rein in runaway energy and food costs, inflation has been slowly falling towards the ECB's target of 2%.
- Interest rates in Europe have remained on hold since last October, but the central bank will almost certainly cut borrowing costs by a quarter of a percentage point on Thursday, meaning the key deposit rate will fall to 3.75% from 4%.
- This decision will give a major and much-needed boost to the faltering euro zone economy, and will be the first cut since September 2019.
- The move would also signal a move away from the US Federal Reserve, which has also raised interest rates but is not expected to start lowering them until later due to stronger-than-expected US economic data.
