The European Central Bank (ECB) is expected to start cutting interest rates in the eurozone from record highs this week, but that does not mean the move will start a cycle of rapid easing.
Policymakers are poised to cut borrowing costs in the euro zone by a quarter of a percentage point on Thursday, setting the key interest rate at 3.75 percent from the current record level.
ECB officials have widely flagged the coming tapering and dismissed concerns about a departure from the U.S. central bank, whose strong economy has dampened expectations about when rate cuts will begin.
The Frankfurt-based institution launched an unprecedented hike cycle in mid-2022 as energy and food costs rose following Russia’s invasion of Ukraine and amid supply chain problems linked to the pandemic.
After 10 consecutive hikes, it has kept rates on hold since October. However, a steady slowdown in inflation means tapering is now on the horizon, which would ease pressure on the beleaguered eurozone.
