Muted reaction from European market to ECB rates cut

0 Comment(s)Print E-mail Xinhua, June 7, 2024
Adjust font size:

ROME, June 6 (Xinhua) -- Markets had a muted reaction Thursday after the European Central Bank (ECB) issued its first interest rate cut since 2019, demonstrating that the European economy is willing to break from the monetary policies of other leading central banks.

The main European Union stock exchanges showed modest gains in trading Thursday: the main indexes for the bourses in Amsterdam, Frankfurt, Madrid, Milan, and Paris all finished higher.

The strongest gains were on the Italian Stock Exchange in Milan, where the blue-chip index climbed nearly 1 percent. As a major exporter, Italy is particularly impacted by changes in interest rate policy.

The euro currency, meanwhile, fell slightly against the U.S. dollar and the British pound.

The ECB's move to cut the benchmark interest rate by 25 basis points to 3.75 percent was largely expected. The previous rate was at an all-time high. It was the first time the ECB cut rates in five years.

The ECB began raising rates in 2022 to help combat inflation sparked by a spike in energy markets in the wake of the conflict between Russia and Ukraine.

However, on Thursday the ECB said it still had concerns over inflation.

"Despite the progress over recent quarters, domestic price pressures remain strong as wage growth is elevated, and inflation is likely to stay above target well into next year," the ECB said in a statement.

The ECB also raised its outlook for inflation in the 20-nation euro currency zone to 2.5 percent this year, and 2.2 percent in 2025.

The ECB's decision came after Canada's rate cut on Wednesday bringing its headline rate down from 5 percent to 4.75 percent. The U.S. Federal Reserve will make its decision on rates at its meeting next week and the Bank of England may take its move at its meeting on June 20. Enditem

Follow on Twitter and Facebook to join the conversation.
ChinaNews App Download
Print E-mail Bookmark and Share

Go to Forum >>0 Comment(s)

No comments.

Add your comments...

  • User Name Required
  • Your Comment
  • Enter the words you see:   
    Racist, abusive and off-topic comments may be removed by the moderator.
Send your storiesGet more from