FRANKFURT – The European Central Bank cut interest rates again on Oct 17, upping the tempo at which it is lowering borrowing costs as inflation in the eurozone cools faster than expected.
The Frankfurt-based institution reduced rates by a quarter point, following a cut of the same size at its last meeting in September.
Oct 17’s move was the first time that the ECB has cut rates back to back since it started its cycle of easing rates in response to declining inflation.
After peaking at 4 per cent, the ECB’s benchmark deposit rate sits at 3.25 per cent following the latest cut.
The decision came after a late downwards revision to September’s inflation data in the euro zone on Oct 17.
Consumer prices in the bloc rose by 1.7 per cent year on year in September, according to the EU’s data agency Eurostat, 0.1 percentage points less than the initial estimate.
Before the change, September’s reading was already the first time in three years that inflation in the eurozone had dipped below the ECB’s two-per cent target.
The incoming data showed that the process of cooling consumer prices was “on track”, the ECB said in a statement.
“Inflation is expected to rise in the coming months, before declining to target in the course of next year,” the ECB said.
Slovenia meeting
ECB rate-setters met in Slovenia to discuss their next move, as they made one of their regular tours away from the institution’s headquarters in Frankfurt.
Oct 17’s decision was the third time that they have cut since rates reached their peak.
The bank cranked rates up higher and faster than ever before in response to soaring inflation in the wake of the Covid-19 pandemic and the Russian invasion of Ukraine.
But recent, lower-than-expected inflation figures have
