The interest rate cut is the European Central Bank's third since June and shows optimism among rate-setters over the path of inflation.
Canada’s inflation rate fell to 1.6 per cent in September, after hitting the Bank of Canada’s two per cent target in August. As Anne Gaviola explains, that’s prompted more economists and market watchers to call for a larger interest rate cut from the central bank on Oct. 23.for the 20 countries that use the euro currency, cut borrowing costs once again on Thursday after figures showed inflation across the bloc falling to its lowest level in more than three years and economic growth waning.
The rate cut is its third since June and shows optimism among rate-setters over the path of inflation. Inflation sank to 1.8% in September, the first time in three years that it has been below the ECB’s target rate of 2%.In a statement accompanying the decision, the ECB said recent economic evidence shows that “the disinflationary process is well on track.” However, it predicted an inflation pick-up in the coming months, before a return to its target in the course of next year.
One reason why inflation has fallen around the world — it’s down at 2.4% in the U.S. and 1.7% in the U.K. — is that central banks dramatically increased borrowing costs from near zero during the coronavirus pandemic when prices started to shoot up, first as a result of supply chain issues built up and then because of Russia’s full-scale invasion of Ukraine in early 2022, which pushed up energy costs.
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