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The Eurozone financial system unexpectedly stagnated within the fourth quarter, ratcheting up the stress on the European Central Financial institution to chop rates of interest extra aggressively.
The shortage of progress within the quarter in contrast with the 0.1 per cent growth forecast by economists polled by Reuters and 0.4 per cent progress within the third quarter.
For 2024, the Eurozone economy expanded 0.7 per cent, in keeping with information launched by Eurostat on Thursday.
The figures come simply hours earlier than the ECB is anticipated to chop its benchmark rate of interest by a quarter-point to 2.75 per cent, the bottom stage since early 2023.
“The area’s financial prospects are worse than most suppose,” mentioned Jack Allen-Reynolds at Capital Economics. “We count on this to immediate the ECB to chop rates of interest by extra this 12 months than is discounted available in the market.”
The stagnation additionally underlines the problem dealing with the area as Germany, the Eurozone’s greatest financial system, struggles with a extreme manufacturing downturn.
German GDP contracted by 0.2 per cent within the last three months of 2024 whereas France’s financial system unexpectedly shrank by 0.1 per cent. Output was flat in Italy.
Following the info, merchants elevated bets that the ECB will minimize charges 4 occasions this 12 months, in keeping with the swaps market.
The euro, which has weakened in current months as the trail of US and European rates of interest diverge, was little modified at $1.041.
The deteriorating image within the Eurozone contrasts with the US, which the IMF predicts will develop by 2.7 per cent this 12 months, near its tempo in 2024. The US Federal Reserve left rates of interest unchanged on Wednesday.