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The European Central Bank (ECB) on Thursday cut the key interest rate by 0.25 percent to boost economic growth amid softening inflation. This will reduce the cost of loans for companies and homebuyers. In the meeting of the ECB’s policy rate-setting committee, the interest rate was reduced from 3.75 percent to 3.5 percent. This is the second time the policy rate has been cut. Earlier, the bank had increased the policy rates to reduce the inflation rate which had reached double digits. The main reason for the increase in inflation was Russia’s blocking of natural gas supply in response to the sanctions imposed after the attack on Ukraine. It is noteworthy that inflation in the 20 countries using the euro currency came down to 2.2 percent. In October 2022, it had reached a high of 10.6 percent. Inflation has come down mainly due to the softening of crude oil prices.
Pakistan reduced interest rate by 2%
Pakistan’s central bank on Thursday made a big cut of 2 percent in the policy interest rate, bringing it down to 17.5 percent. The State Bank of Pakistan said in a statement that its Monetary Policy Committee (MPC) decided to cut the policy interest rate by 2 percentage points. Thus, the policy rate has come down from 19.5 percent to 17.5 percent. The central bank said, “Before reaching this decision, the MPC took into consideration several factors affecting the inflation scenario.” Retail inflation in Pakistan, which is facing a financial crisis, was 9.6 percent in August. Financial experts were expecting a 1.5 percent cut in the interest rate. However, some experts have also expressed the possibility of a cut of 2 percentage points.
The decision will come on September 18 in America.
The US central bank Federal Reserve will decide on the key interest rate in its meeting on 17-18 September. Most experts believe that the Fed will cut the interest rate by 25 basis points i.e. 0.25%. However, some believe that the Federal Reserve can also make a big rate cut of 0.50 percent.
