ECB maintains interest at 4 percent for third time

The European Central Bank (ECB) has kept its leading interest rate at 4% once again. This stability is attributed to falling inflation in the eurozone, which is now at 2.9%, down from over 10% in late 2022. Economists predict that the ECB will likely cut rates in the coming year due to decreased inflation paired with a weakening economy, including reduced demand. Arbejdernes Landsbank’s chief economist expects 3-4 rate cuts in 2024, with the possibility of the first reduction as early as spring. Previously, the rate was increased ten times over 15 months, last hiked in September after being at -0.5% in July 2022. Sydbank’s chief economist emphasizes that the ECB must balance rate cuts to avoid reigniting inflation or causing severe economic decline and job loss. ECB officials have been managing expectations about future rate cuts.