The European Central Bank (ECB) is increasingly expected to cut interest rates on the 17th (local time).
Bloomberg reported on the 13th that an ECB rate cut in October, which seemed almost impossible just a month ago, has suddenly become likely.
The agency reported that ECB monetary policy committee members appear to be paying more attention to recent signs of private sector economic contraction. The September Eurozone manufacturing PMI fell to 44.8 from 45.8 in the previous month and was below market expectations. A PMI above 50 indicates expansion, while below 50 indicates contraction.
Although this monetary policy meeting is being held just five weeks after the previous one, so there is not much new information, the committee members seem to be abandoning their cautious stance on inflation in response to the economic slowdown.
David Powell, chief economist for the Euro area at Bloomberg Economics, said the ECB is likely to lower borrowing costs by 0.25 percentage points each in October and December.
The Eurozone (20 countries using the euro) consumer price inflation rate in September fell below the ECB's medium-term target (2%) for the first time in about three years and five months. The inflation rate dropped to 1.8% annually, a larger-than-expected decline from 2.2% in the previous month.
Last month, the ECB cut the deposit rate by 0.25 percentage points from 3.75% to 3.50%, and lowered the main refinancing rate and marginal lending rate by 0.6 percentage points each.
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