(Bloomberg) — The European Central Bank will continue to reduce borrowing costs in 2025, according to Governing Council member Boris Vujcic.
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“The direction is clear, it is the continuation of the direction from 2024, and it is a further reduction in interest rates,” the head of the Croatian central bank told state broadcaster HRT1 in an interview on Saturday.
Last week, the ECB cut the deposit rate by a quarter point to 3%, the fourth such measure since June. Officials have indicated more steps will follow, although they differ on how many will be necessary.
“I don’t know to what extent” the ECB will cut rates, Vujcic said. “That will be determined by the data, mainly the inflation rate, whether it will slow down, according to our projections, and we will see the impact of the monetary policy transmission and our projections.”
One point of uncertainty weighing on the outlook is the threat of tariffs after Donald Trump returns to the White House next month.
“If there is a trade war, it will be bad for growth in Europe and the rest of the world,” Vujcic said, adding that trade wars often boost prices. “We hope we don’t see a trade war, that won’t be good for anyone.”
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