Inflation in the eurozone dropped to 1.8% in September, falling below the European Central Bank's target of 2% for the first time in over three years. This decline was attributed to decreasing energy prices, providing consumers with some relief from previous inflation spikes. The latest official figure, released by the European Union statistics agency Eurostat, showed a decrease from 2.2% in August.
The possibility of faster interest rate cuts from the ECB is now being considered in light of the subdued growth outlook. The central bank has already implemented two rate reductions, and economists are speculating about the potential for another cut at the upcoming meeting on October 17.
Central banks, including the ECB and the U.S. Federal Reserve, had raised interest rates rapidly to address inflation surges following the economic recovery from the pandemic and geopolitical tensions such as the Russia-Ukraine conflict. However, with the easing of supply chain disruptions and energy price spikes, inflation has moderated, prompting central banks to cautiously adjust rates to support economic stability.
While the ECB is monitoring inflation closely, some underlying measures, particularly in services prices, remain elevated. ECB President Christine Lagarde emphasized that the bank's decisions on rate adjustments will be data-driven and made on a meeting-to-meeting basis, without committing to a specific future rate cut schedule.
