This is an announcement that should please those considering negotiating a mortgage this year. Members of the Governing Council of the European Central Bank (ECB) agree on lowering interest rates in the euro zone, the president of the institution, Christine Lagarde, said on Tuesday.
Questioned on the American channel CNN, there is, according to her, a “broad” agreement within the decision-making body of the ECB that the next decision “if we have the choice between increasing and reducing, will be to reduce them” . “There may be several pauses but the next move will be downward,” she added.
The Eurozone is “on a disinflationary trend”
The ECB has chained three consecutive pauses concerning the variation of its main interest rate, currently at a record level of 4%, reached after a succession, also historic, of increases aimed at slowing down inflation which soared on the continent after the Russian invasion of Ukraine begins in February 2022.
After reaching 10% last year, inflation in the euro zone has gradually slowed to approach the ECB’s medium-term objective of 2%, although it has seen a slight increase in December, to reach an annual increase of 2.9%.
“We are on a disinflationary trend, there is no doubt about it,” said Christine Lagarde, “but we must be further along in the process to have confidence.” A drop in interest rates in the euro zone is already widely anticipated by investors, leading in particular to a fall in the euro against the dollar in recent days.
The specter of recession
The ECB declared itself last Thursday in favor of a third status quo in a row, keeping its rates at a historically high level. During the press conference following this decision, Christine Lagarde notably indicated that she was maintaining the comments she had made at the Davos forum indicating that a rate cut around June was “probable”.
The pressure is all the greater as the European economy narrowly escaped recession at the end of the year and posted meager growth of 0.5% over the whole of 2023, a far cry from the good health displayed by the American economy. Among the reasons cited by analysts, the high interest rates imposed by the ECB are notably highlighted. The contraction in credit is weighing on investment and consumption by businesses and households alike, while exports are suffering from the slowdown in global demand.