European Central Bank Set to Deliver Final Rate Cut of the Year: Live Updates

The European Central Bank (ECB) is poised to deliver its final interest rate cut of the year on Thursday, December 12, as it seeks to support the eurozone economy amidst geopolitical uncertainties and slowing growth. The ECB is expected to lower its key deposit rate by 25 basis points, bringing it down to 3%, following a series of rate cuts throughout 2024. This move is aimed at boosting consumer spending and business investment, while also addressing concerns about inflation and economic stability.



The ECB's decision to cut interest rates comes as the eurozone economy faces headwinds from various external factors, including the return of Donald Trump to the White House and potential trade tariffs. The ECB is bracing for a year of "heavy lifting" to support dwindling eurozone growth, as political instability in leading economies sends bond yields higher (ING Research, 2024). Trump's return is expected to cannibalize the flow of funds into crucial sectors by cutting taxes, deregulating, and attracting investment from Europe, which could be more damaging to the eurozone economy than tariffs (Carsten Brzeski, ING Research, 2024).

The ECB's quarterly macroeconomic projections, to be released alongside the rate decision, will factor in these highly uncertain global impacts, influencing the ECB's guidance for the year ahead. The ECB is expected to provide clear communication on its future policy path, including the possibility of further rate cuts or adjustments to its asset purchase program.

The ECB's final rate cut of the year is expected to have a significant impact on the cost of borrowing for businesses and consumers in the eurozone. With a 25-basis-point reduction, the deposit facility rate will fall to 3%, making borrowing cheaper. This will benefit businesses by reducing their financing costs, potentially boosting investment and economic growth. For consumers, lower interest rates mean cheaper mortgages and loans, stimulating spending and consumption.



The European Central Bank's (ECB) final rate cut of the year is expected to boost consumer confidence and spending in the eurozone. According to a survey by the European Commission, consumer confidence in the eurozone has been improving, reaching -11.5 in December 2024, up from -13.2 in November. Lower interest rates make borrowing cheaper, encouraging consumers to spend more and invest in big-ticket items. This increased spending can stimulate economic growth and support businesses in the eurozone.

In conclusion, the ECB's final rate cut of the year is a crucial step in supporting the eurozone economy amidst geopolitical uncertainties and slowing growth. The rate cut is expected to have a positive impact on consumer confidence, spending, and business investment, while also addressing concerns about inflation and economic stability. As the ECB provides clear communication on its future policy path, investors and businesses can better navigate the uncertain economic landscape and make informed decisions about their portfolios and operations.