ECB lowers key interest rates: What awaits us in 2025?

2024-12-13 09:45:01

Hello,

the European Central Bank has just decided to cut interest rates again, a move that elicits mixed reactions. On the one hand, lower interest rates could stimulate economic growth by encouraging investment and consumption. On the other hand, there is a risk that inflation could worsen, which might affect consumers' purchasing power. Furthermore, the question arises as to how this decision could impact the banking system and citizens' savings in the long term. What consequences could ECB policy have by 2025? Are there other measures that would be more sensible to ensure economic stability in the Eurozone?

Regards

2024-12-13 09:55:46

Wrong question. The only goal of the ECB is price stability. Economic development is indeed considered, but it is subordinate to the only real goal. In this respect, there are certainly measures, but they do not come from the ECB for economic stability, as it is not allowed, cannot, and will not take measures in that direction.

2024-12-13 10:59:00

Wrong question. The only goal of the ECB is price stability. Economic development is indeed considered, but it is subordinate to the only real goal. In this respect, there are certainly measures, but those for economic stability do not come from the ECB, since it may not, cannot, and will not implement measures in that direction.

Of course, that is the official task of the ECB, but you are not seriously going to claim that the ECB adheres to this guiding principle?

2024-12-13 11:04:44

Of course, that is the official task of the ECB, but you are not seriously going to claim that the ECB adheres to this mission statement?

Indeed, it does. All measures – even if they have effects on the economy – aim and have aimed in the past at price stability = inflation.

2024-12-13 11:48:23

Yes. That is why such a big fuss is always made when a new "Währungshüter" is elected. The southern countries do not want one from the north and vice versa. That is certainly not because the Währungshüter makes decisions free from any political and national color solely with regard to stability. Especially since that is already a joke in itself, because the inflation target is set at 2% and thus contradicts the word "price stability." Prices rising by 2% per year are everything but stable. Of course, politics and economics also play a role... and here primarily those of the country one comes from. A German or Dutch ECB president would act completely differently than an Italian has done in the past and a Frenchwoman is doing right now. The exit from the zero-interest-rate phase was not found also because it would have already ruined the southern countries in the middle of the decade.

2024-12-13 12:20:25

Yes. That’s why there is always so much fuss when a new "currency guardian" is elected. The southern countries don’t want someone from the north and vice versa. It certainly isn’t because the currency guardian makes decisions solely with regard to stability, free from any political and national color.
Especially since that is already a joke in itself, because the inflation target is at 2%, which contradicts the word "price stability." Prices rising 2% per year are anything but stable.

Of course, politics and economics also play a role... and here primarily those of the country one comes from.

A German or Dutch ECB president would act completely differently than an Italian has done in the past and a Frenchwoman is doing right now. The exit from the zero-interest phase wasn’t found also because it would have ruined the southern countries already in the middle of the decade.

Low but stable inflation is therefore the (worldwide) goal because one wants
a) distance from deflationary collapse and
b) innovation dynamics

But in the literal sense, you are right – stability of price development would be more accurate.

ECB lowers key interest rates: What awaits us in 2025?

Fyddles

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Teimo1988

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MachsSelbst

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