ECB reduces interest again - what does that mean for consumers?

ECB reduces interest again - what does that mean for consumers?

The European Central Bank (ECB) continues its course of the interest rate reductions and has announced that the deposit rate is reduced by 0.25 percentage points to 2.0 percent. This happens in view of a persistently weak economy in the euro area and a falling inflation. Since mid-2024, this has been the eighth interest rate reduction, which is primarily aimed at stabilizing the economic Situation and to alleviate the other negative economic effects, as https://www.vol.at/ezb-schenkt-zinsen-um-025- percent.

In May, inflation in the euro area was only 1.9 percent, which is below the target of 2.0 percent and represents a decline compared to 2.2 percent in April. However, the consumer survey shows that many do not feel significant relaxation in the prices. According to [tagesschau.de, the inflation expectations of the citizens have increased: inside. In view of increasing food prices that have increased by 30 percent in the past five years, a price increase of 3.1 percent will be forecast in the next twelve months - the highest value in over a year.

inflation and their effects

The basic situation is also influenced by price reductions on the market: Discounters like Lidl and Aldi are planning massive price reductions to different product categories in order to remain attractive in the competitive environment. Lidl has announced that the prices of 500 items can be reduced by up to 35 percent, while Aldi promises price cuts for 1,000 items. Edeka and Rewe are also active, which shows that the large retail chains are trying to counteract the increasing inflation.

Nevertheless, the increase in food prices remains a central topic. In certain categories such as fruit and vegetables, these have now even achieved an inflation of more than 4 percent. The uncertainties not only show the lack of trust in the ECB, but also that consumers have to continue to struggle with rising prices, as also found by tagesschau.de. This means that the expectations are reduced to the ECB until the situation in the food prices is noticeably improved.

The future of the ECB strategy

The ECB has also passed a new monetary policy strategy that sets a 2 percent inflation goal in the medium term. Among other things, this strategy takes into account climatic risks and will continue to respond to current economic challenges. The harmonized consumer price index (HVPI) remains decisive as a measurement size for the price development, according to the information from bundesbank.de.

For the foreseeable future, a clear forecast of future interest steps of the ECB remains uncertain. The ECB council has decided not to give a fixed interest path and to keep an eye on the development of inflation and the economy. The next review of the monetary policy strategy is planned for 2025, which indicates that the ECB keeps an eye on the economic conditions and will react if necessary.