European Central Bank cut rates for the first time in three and a half years or 5:09 on September 12
The European Central Bank will hold a board meeting on the 12th to discuss additional monetary easing measures while the eurozone economy is sluggish due to the effects of trade friction between the US and China. Many people in the market view that interest rates will be cut for the first time in three and a half years to support the economy.
The economy in the Eurozone is becoming increasingly slow due to the sluggish exports caused by trade friction between the United States and China. In particular, Germany, the largest economy in the euro zone, suffered a negative impact on the GDP growth rate from April to June due to a major blow to the automobile industry.
In light of this economic situation, the European Central Bank will hold a board meeting in Frankfurt, Germany, on the 12th, to discuss additional monetary easing measures.
Among the market participants, the view that the European Central Bank further lowers the interest rate for depositing funds from financial institutions from the current minus 0.4% to support the economy. It will be the first time in three and a half years since March 2016 if interest rates were cut.
There is also a view that the market may also implement other monetary easing measures, such as resuming quantitative easing measures to purchase government bonds and supply a large amount of funds to the market.
If the European Central Bank decides to cut rates following the United States, it seems likely that interest rate competition will spread further due to the desire to curb price increases in its own currency so as not to be disadvantaged in exports.
The Eurozone, where the European Central Bank is responsible for monetary policy, consists of 19 countries, including Germany, France and Italy.
In this euro area, GDP grew at a rate of 0.2% from April to June, halving from the previous three months.
A major factor is that exports were sluggish due to intensifying economic friction between the United States and China. Especially in Germany, the largest economy in the region, the manufacturing industry centered on automobiles was hit hard, and the growth rate of GDP fell to minus 0.1%. France also grew at a low rate of 0.3%, while Italy also achieved zero growth, further slowing down in major eurozone countries.
Uncertainty about the future of the economy as companies in the euro area are refraining from seeing how the UK's withdrawal from the EU = European Union will be in the end of next month. The feeling is getting stronger.