There were no surprises yesterday when the European Central Bank lowered their interest rates levels by 25 basis points, down to a base rate of 2.9%. Even if the decision did not come as a shock, markets did react within that hour.
In the press conference ECB president Christine Lagarde mentioned that the European economy is set to remain frail in the short term. Manufacturing is expected to continue decreasing in the first quarter leaving pressure on economic growth. The upside is that the service sector is forecasted to see expansions – which could dampen the economic situation across Europe. While GDP-data still is in a sensitive region, inflation rates are expected to come to a halt due to wages are predicted to head downwards. Christine Lagarde also mentioned that as long as trade tensions between Europe and US stays quiet, exports should start picking up and show recovery.
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