The European Central Bank (ECB) may cut interest rates again if inflation continues to decline and economic growth remains weak, the head of the Central Bank of Lithuania and ECB Council member Gedimin Šimkus announced on Monday.
Pointing to forecasts that inflation in the Eurozone will be 2% next year, Šimkus told reporters in Vilnius that the direction of monetary policy is clear.
Šimkus, however, refused to predict the ECB’s upcoming behavior at the December meeting.
At the same time, the President of the Bank of Latvia, Mārtiņš Kazāks, also said that ECB interest rates will continue to decrease, as inflation is gradually returning to the bank’s 2% target.
“The drop in inflation and the weak economy allow for a further gradual reduction in interest rates,” Kazaks writes in his blog.
As reported, the ECB decided to lower interest rates by 0.25 percentage points on Thursday.
The overnight deposit rate will be reduced to 3.25%. The deposit facility rate is the interest rate at which the Governing Council of the ECB decides the direction of its monetary policy stance.
The rate of main refinancing operations was lowered to 3.4% and the rate of overnight loans – to 3.65%.
The new rates will come into effect on 23 October.
