QNB: Falling inflation opens the door to interest rate cuts in Euro-Area – Gulf Times

QNB: Falling inflation opens the door to interest rate cuts in Euro-Area – Gulf Times

The QNB Group headquarters in Doha.

Qatar National Bank (QNB) predicted that the ongoing decline in inflation rates would pave the way for the European Central Bank (ECB) to cut interest rates.In its weekly commentary, QNB said, "At the beginning of 2020, the outbreak of the Covid-pandemic set in motion a succession of exceptional events that boosted inflation rates to record levels in the Euro-Area in 2022. At the initial stages of the pandemic, lockdowns and supply-chain bottlenecks imposed constraints on supply. Policy responses quickly followed with unprecedented monetary and fiscal stimulus that fuelled demand. Additionally, in 2022, the Russo-Ukrainian war triggered a major commodity shock that was specially negative for Europe, which was heavily dependent on energy imports from Russia. These factors drove the rate of inflation in the Euro-Area to a record peak of 10.6 percent year-over-year in October of 2022."The bank pointed out, "With inflation rocketing high above the target of monetary policy, the response from the European Central Bank (ECB) followed. The ECB embarked on a record tightening cycle of 10 consecutive rate hikes, increasing its main refinancing rate by 450 basis points to 4.5 percent in September 2023 to bring inflation down. After