(Bloomberg) — The European Central Bank will continue to lower borrowing costs in 2025, according to Governing Council member Boris Vujicic.
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“The trend is clear, it is a continuation of the trend from 2024, which is further reduction in interest rates,” the head of the Croatian Central Bank told state radio HRT1 in an interview on Saturday.
Last week, the European Central Bank reduced the deposit rate by a quarter point to 3%, the fourth such step since June. Officials indicated that more steps will be followed, although there is disagreement on how many steps are necessary.
“I don’t know to what point” the ECB will cut interest rates, Vujicic said. “This will be determined by the data, primarily the inflation rate, and whether it will slow, according to our expectations, and we will see the impact of the monetary policy transition, and our expectations.”
One point of uncertainty affecting the outlook is the threat of tariffs after Donald Trump returns to the White House next month.
“If there is a trade war, it will be bad for growth in Europe and the rest of the world,” Vujicic said, adding that trade wars usually lead to higher prices. “We hope we don’t see a trade war, that would be in no one’s interest.”
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