(ANSA-AFP) - FRANKFURT, MAR 6 - The European Central Bank cut
interest rates again Thursday to boost the struggling eurozone
but suggested easing could be nearing an end and warned of
"rising uncertainty" amid massive German spending plans and US
tariff threats. It was the central bank's six reduction since
June last year, with its focus having shifted from tackling
inflation to providing relief for the single currency area,
which has been eking out meagre growth. The
quarter-percentage-point reduction brought the Frankfurt-based
institution's benchmark deposit rate to 2.5 percent. The rate
reached a record of four percent in late 2023 after the ECB
launched a furious hiking cycle to tame energy and food costs
that surged in the wake of Russia's invasion of Ukraine. In a
statement announcing the decision, the ECB said the process of
inflation coming down was "well on track" and it believed that
it would settle around the central bank's two-percent target.
Eurozone inflation eased slightly to 2.4 percent in February.
But it a sign of continuing price pressures, the ECB raised its
inflation forecast for this year to 2.3 percent from a previous
prediction of 2.1 percent. Crucially, the ECB tweaked guidance
to say that rates were becoming "meaningfully less restrictive",
suggesting they were no longer having a major impact on bringing
down inflation. The change in language is a signal markets had
been on the lookout for, and which they believe suggests that
policymakers are gearing up to halt rate cuts. Highlighting the
continued economic woes for the 20 countries that use the euro,
the central bank trimmed its growth forecast for 2025 and 2026,
to 0.9 percent and 1.2 respectively. The bank also warned about
"current conditions of rising uncertainty," insisting it would
make its decisions based on incoming data. (ANSA-AFP).
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