The ECB is leaving interest rates unchanged: what that means for investors and how the economy is developing.

The ECB is leaving interest rates unchanged: what that means for investors and how the economy is developing.

According to a report by www.tagesschau.de,

The European Central Bank (ECB) has decided to leave interest rates in the euro area unchanged for the second time in a row. The key interest rate at which banks can obtain fresh money from the central bank remains at 4.5 percent. She also announced that she would push ahead with the gradual reduction of bond purchases made as part of the Corona aid program PEPP. After months of interest rate increases, it is now the second interest rate break in a row. The euro area economy is already weakening and the inflation rate weakened in November.

Experts such as the head of the Ifo Institute, Clemens Fuest, welcome the interest rate decision. They believe it is too early to cut interest rates as there are still risks of inflation. However, they also emphasize that interest rates must not be lowered too quickly. The ECB Governing Council has also decided to gradually reduce bond purchases as part of the Corona aid program PEPP.

Together with the US Federal Reserve (Fed), which has also left interest rates unchanged, possible effects on the market and the financial industry can be derived from this. It is possible that interest rate cuts could lead to slower economic growth and higher inflation, but credit demand and investment could also be affected. On the other hand, lower interest rates could also cause stock markets to continue to rise and construction financing to become cheaper, which could increase demand for real estate. It remains to be seen how interest rates will develop in the coming months and years.