ECB Lowers Rates Again as Eurozone Growth Stalls

The European Central Bank (ECB) has lowered its benchmark interest rate by another 25 basis points, bringing it down to 2.75%, as inflation edges closer to the 2% target while economic growth falters.

The move comes amid a bleak economic backdrop, with fresh Eurostat data confirming that the eurozone economy flatlined in the final quarter of 2024. GDP growth stalled at 0.0%, missing the modest 0.1% growth forecast and marking a sharp slowdown from the 0.4% expansion in Q3. The broader EU fared slightly better, posting 0.1% quarterly growth. On an annual basis, eurozone GDP rose by 0.9%, while the EU as a whole saw a 1.1% increase, both marginally better than the previous quarter’s readings.

Germany and France, the bloc’s two largest economies, contracted unexpectedly, deepening concerns over the region’s fragile recovery. Germany’s GDP shrank by 0.2%, underperforming expectations of a 0.1% decline, while France slipped 0.1% instead of stagnating as predicted. Italy managed to avoid contraction but showed no growth for the second consecutive quarter. In contrast, Portugal led with a 1.5% GDP increase, followed by Lithuania at 0.9% and Spain at 0.8%.

What Does This Mean for Me?

The latest figures have reinforced market bets on further ECB rate cuts. With core inflation moderating and growth stuck in neutral, investors are watching closely to see whether the central bank continues easing policy to support the struggling economy. For now, all eyes remain on how quickly inflation will stabilize and whether additional rate cuts will follow in the coming months.