Decline in inflation gives rise to speculations of rate cut by ECB

  • World
  • Saturday, 09 Dec 2023

FRANKFURT, Dec. 8 (Xinhua) -- As the European Central Bank (ECB) is set to hold its regular rate-setting meeting next week, the recent decline in inflation has given rise to speculations that the bank will cut its interest rates, German media reported on Friday.

Traders are betting on drastic rate cuts by the ECB next year, given that inflation has been falling at a faster pace than expected, German media finanzmarktwelt reported.

Inflation in the eurozone further dropped to 2.4 percent in November from 2.9 percent in October, Eurostat, the statistical office of the European Union, said.

Isabel Schnabel, member of the ECB's Executive Board, has said in a recent interview that "the most recent inflation number has made a further rate increase rather unlikely."

The ECB's key interest rates are hovering at levels so high that businesses are under great pressure. A recent report released by German economic research institute Creditreform showed that bankruptcies in Germany this year have risen by more than 23 percent compared with 2022 due to the high energy costs and interest rates.

Economists with Deutsche Bank expect the ECB to cut rates by 150 basis points, with a first cut as early as April, according to finanzmarktwelt.

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