ECB Halts Interest Rate Hikes Amid Falling Inflation and Lending Slump

The European Central Bank (ECB) has decided to pause its interest-rate increases due to declining inflation and a slowdown in lending. This announcement was made by ECB Council member Boris Vujcic on Croatian state broadcaster HRT1. Under the leadership of President Christine Lagarde, the ECB has paused its extensive tightening campaign, marking the first time in over a year that rates have been held steady.

Inflation in the euro area, which reached a peak of 10.6% in October 2022, is anticipated to drop to 3.1% this month, aligning closely with the ECB’s target of 2% according to recent economic projections. As a response to these changes, commercial lenders have adjusted rates for mortgages and loans, while savers have experienced less pronounced effects.

Vujcic also pointed out that Croatian banks have not raised deposit interest rates as significantly as their German counterparts. Instead, they are offering lower rates on mortgages and loans in this newest member of the euro area. He expressed optimism about meeting the ECB’s inflation target for 2025.

President Lagarde has indicated that there are no expected immediate hikes and she foresees stable borrowing costs until 2024. This decision is part of the ECB’s approach to tackling decreasing inflation and a lending slowdown after a series of measures taken.

This article was generated with the support of AI and reviewed by an editor.