Why the European Central Bank is cutting interest rates now | News World

The European Central Bank has decided its fight against inflation is wrapping up — it cut interest rates Thursday for the first time since 2019. It’s ahead of the Federal Reserve here in the U.S., which hasn’t cut rates and isn’t expected to for several months, if at all this year. That’s despite the fact that inflation was more severe across the pond than in the U.S. and the ECB was later to the game in fighting it than the Fed. So what gives?

Two years ago to the month, U.S. inflation peaked at around 9%. In Europe, it would get worse — nearly 11%. But European inflation was different.

“In Europe, it was very much driven by the energy price shock following Russia’s invasion in Ukraine,” said Nick Rees, a foreign exchange analyst at Monex, based in London. In some countries the Ukraine war raised the cost of electricity by 70% or more. But as Europe found new supplies, prices came back down. In the U.S., higher prices turned…

Source www.marketplace.org

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