ECB Rate Cut Looms as European Inflation Falls

European inflation eased to 2.2% in August, the lowest level in over a year, signaling a potential shift in monetary policy. The drop, driven by falling energy prices and a decline in Germany’s inflation rate, brings the Eurozone closer to the European Central Bank’s (ECB) target of 2%. The ECB is expected to cut its key interest rate at its September 12 meeting, as economists believe the fading inflationary pressure and slowing economic growth justify a rate reduction. While the path towards price stability may not be entirely smooth, the ECB is confident that inflation will reach its target by the end of next year. However, the bank remains cautious, noting that the impact of rate cuts is delayed, and keeping rates too high for too long could have negative consequences on economic activity and employment.