European Central Bank cuts growth, inflation projections

Frankfurt: The European Central Bank (ECB) cut some of its growth and inflation projections on Thursday, putting price growth back at its 2 per cent target next year, as weak growth and benign energy prices limit price pressures.

The ECB has kept interest rates at a record high since September but policymakers are now openly discussing rate cuts, suggesting that the only real debate is whether to start policy easing sooner or wait for more evidence that inflation has indeed been tamed.

The euro zone's central bank now sees inflation at 2.3 per cent this year, below the 2.7 per cent projected three months ago, while the 2025 forecast was trimmed to 2.0 per cent from 2.1 per cent.

In 2026, a timeframe often considered too far out to forecast accurately, inflation was seen at 1.9 per cent, maintaining its forecast from December.

The growth outlook remained weak as foreign demand is muted, industrial orders are drying up and construction activity is being held back by high interest rates.

The economy of the 20-country euro zone is seen expanding by 0.6 per cent this year, after a 0.8 per cent projection in December while in 2025, growth is seen at 1.5 per cent.