With the European Central Bank lowering interest rates by 0.25%, there is a lot to cheer for international finance and the crypto space. The bank believes this will help in its war against inflation. Presently, the interest rate stands at 4.25%. This is a similar consideration given by the US Federal Reserve.
In previous years, the ECB raised the interest rate by 450 points to halt the extreme inflation situation, which reached 10.6%. However, the interest rates pertaining to refinancing activities, as well as the slight lending and depositing option, were lowered by 4.25%, 4.50%, and 3.75%, respectively.
Even with inflation going above the set target of 2% by the ECB, the month of May 2024 witnessed the dropping of policy rates by the concerned authorities. According to the last data released by the ECB, there seem to be expectations that inflation will drop to 2.2% in 2025 and 2026, which may be 1.9%. However, in the case of the main inflation scenario, other than food items and energy, there is expected to be a lowering to 2.2% next year, followed by 2% in 2026.
Inflation has been a topic of extreme concern for all countries around the world, playing havoc with investors’ interests. The pandemic, too, has contributed immensely to this, besides other significant worldly matters. However, the light at the end of the tunnel seems to be shining for all, with the newly introduced interest rate drop by the ECB, with expectations soaring regarding the US federal Reserve imitating the move.
