The annual inflation rate in July was 2.5%, down 0.3 percentage points from June, the National Statistics Institute (INE) confirmed on Monday. Market analysts say the decline in inflation could lead the European Central Bank to cut interest rates by 0.25% every three months until the end of 2025.
Energy contributed to the slowdown in inflation. According to INE, “the fluctuation in the energy index decreased to 4.2% (9.4% in the previous month), mainly due to a smaller monthly increase in electricity prices (0.3%) compared to the previous month. The increase occurred in July 2023 (15.4%).”
Inflation is largely responsible for the European Central Bank’s monetary policy stance over the past two years, marked by increases in key interest rates. Reflecting the increase in these rates, there has been a rise in Euribor, which serves as a benchmark for home loans.
The decline in inflation led the ECB to cut rates by 0.25% in June, before the 2% target was reached.
A survey of several market analysts, reported this Monday by the publication Negócios, shows that they believe that the deposit rate should reach 2.25% in December 2025. Analysts expect the ECB to fall six times in a row, by 0.25 points on the index, the deposit rate, by the end of 2025.
Author: Raquel Oliveira
Source: CM Jornal
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