ECB Rates Could Fall Below 2% by Mid-Next Year
Interest rates in the eurozone could fall below 2% by the middle of next year, according to economists at Goldman Sachs.
In a note to clients, the economists said that they expect the European Central Bank (ECB) to cut its main interest rate by 50 basis points in December, followed by another 25 basis point cut in March.
This would take the ECB's main interest rate to 1.5%, its lowest level since 2016.
The economists said that the ECB is likely to cut rates in response to the slowing economy in the eurozone.
The eurozone economy grew by just 0.2% in the second quarter of this year, and economists are forecasting that growth will slow further in the second half of the year.
The ECB is also likely to be concerned about the low level of inflation in the eurozone. Inflation in the eurozone was just 0.8% in August, well below the ECB's target of 2%.
The economists said that the ECB's rate cuts are likely to have a positive impact on the eurozone economy.
Lower interest rates will make it cheaper for businesses to borrow money and invest, and will also make it cheaper for consumers to borrow money and spend.
However, the economists warned that the ECB's rate cuts could also have some negative consequences.
Lower interest rates could lead to a decrease in the value of the euro, which could make it more expensive for eurozone countries to import goods and services.
Lower interest rates could also lead to an increase in inflation, if businesses and consumers start to spend more money.
