The European Central Bank (ECB) has decided to keep its key interest rate unchanged at 3.75% to ensure inflation is under control before considering further rate cuts, AP News reports.
ECB President Christine Lagarde did not commit to a rate cut in the upcoming September meeting, emphasizing that future decisions will be data-driven. Inflation in the eurozone has decreased from a peak of 11.6% in October 2022 to 2.5% in June, approaching the ECB’s 2% target. However, inflation has been stuck between 2% and 3% for months, driven by higher wages and price increases in the services sector.
Higher interest rates have slowed economic growth in the eurozone, impacting housing prices and financing for renewable energy projects. However, the job market remains strong with low unemployment, indicating that the economy has not fallen into recession.
