The European Central Bank has reduced interest rates on Thursday, for the fifth consecutive time, in the midst of the growth in the economy of the region.
Policy makers lowered the most important rate of the bank per quarter to 2.75 percent because inflation remained relatively close to their target of 2 percent. The movements come a day after the American Federal Reserve had kept the rates stable because the economic outlooks of the United States and Europe deviate.
“The disinflation process is good on the right track,” the bank said in a statement, adding that there were signs that inflation would settle on a “long -term basis.”
The annual inflation in the eurozone was 2.4 percent in December, slightly higher than the last month as energy prices rose.
The policy makers of the Central Bank have different perspectives on the prospects for inflation. Some emphasize signs of persistent inflatoid pressure, such as price growth in the service sector, which has stubbornly kept around 4 percent. Others, including the most important economist of the bank, Philip R. Lane, have said that if the loan costs remain too high, inflation could be too low.
The economy of the eurozone stagnated in the fourth quarter of last year and weakened after it was expanded 0.4 percent in the previous quarter, data published on Thursday.
The unexpected slump increases the pressure on central bank officials to reduce interest rates to help generate economic growth in a region that suffers from its decreasing competitiveness with the United States and China and is extremely vulnerable to commercial disruptions. The German economy, the largest of the block, is shrinking in the past two years as high energy costs and interest rates on companies and consumers, and political uncertainty prior to the elections next month, the issue has exacerbated.
But central bank officials have said that governments should make cross -border companies and investments easier and not have to rely on monetary policy to stimulate economic growth.
The Federal Reserve kept the interest rates stable on Wednesday after officials said they would “go carefully” in the midst of persistent inflation risks and a strong labor market.
Last year the FED rates lowered by one percentage point, the same as the European Central Bank. Looking ahead, the US Central Bank is not expected to deliver many more cuts on the rates, despite the fact that President Trump insists on them. His policy, such as cutting back on immigration and increasing the input rates, could aggravate the inflationary pressure. Traders expect that the central bank of the eurozone will lower the rates in most of its meetings in the first half of this year.
Until now, Europe has not been the central focus of Mr Trump's plans to increase rates. But a feeling of how disruptive such an event would be arrived on Wednesday from Canada, where the central bank lowered the interest rates and its guidelines on future policy movements fall in the midst of the threat of Mr Trump's proposed rates of 25 percent, who can be imposed without Saturday.
