The European Central Bank (ECB) has revised its projections for growth and inflation downward, citing the negative impact of a global trade war on the eurozone economy. Inflation is expected to fall further below the ECB’s 2% target next year due to lower energy costs, a stronger euro, and sluggish economic growth. However, the ECB anticipates a rebound in price growth in subsequent years, eventually aligning with its target. To address the subdued economic outlook, the ECB cut interest rates again, reducing the deposit rate by a total of 2 percentage points since June of last year. Despite these measures, markets expect additional rate cuts as economic growth remains weak. The ECB’s updated projections indicate GDP growth at 0.9% for 2025, 1.1% for 2026, and 1.3% for 2027, with inflation forecasted at 2.0%, 1.6%, and 2.0% respectively.
— new from Reuters