The European Central Bank (ECB) has announced a halt to its interest-rate increases due to dwindling inflation and a lending slump. The announcement was made by ECB Council member Boris Vujcic on the Croatian state broadcaster HRT1. The ECB, under the leadership of President Christine Lagarde, recently paused its unprecedented tightening campaign, marking the first time in over a year that rates have been maintained.
Euro-area inflation, which peaked at 10.6% in October 2022, is projected to fall to 3.1% this month. This aligns closely with the ECB's 2% goal as per recent economic forecasts. In light of these developments, commercial lenders have promptly adjusted rates on mortgages and loans. However, savers have seen less impact from these changes.
Vujcic further noted that Croatian banks haven't significantly raised deposit interest rates like their German counterparts. Instead, they are providing cheaper mortgages and loans in the euro area's newest member country. He expressed confidence in achieving the ECB's 2025 inflation target.
President Lagarde anticipates no immediate hikes and expects steady borrowing costs until 2024. This comes as part of the ECB's strategy to manage falling inflation and a lending slump after implementing various measures.
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