ECB’s Vujcic: Rate cuts to persist in 2025

The European Central Bank (ECB) will maintain its course of reducing borrowing costs in 2025, according to Governing Council member Boris Vujcic.

The direction is clear, it’s the continuation of the direction from 2024, and that is the further reduction of interest rates,” the Croatian central bank chief said in an interview with HRT1.

The ECB recently cut the deposit rate by 0.25 percentage points to 3 per cent, marking the fourth cut since June. Further reductions are expected, though the extent remains uncertain.

Vujcic emphasised that future decisions will depend on inflation trends and the effectiveness of monetary policy. However, he warned of risks, including potential trade wars following Donald Trump’s return to the White House.

“If there is a trade war, that will be bad for growth in Europe and in the rest of the world,” he said, adding that trade wars typically fan prices. “We hope we won’t see a trade war, that won’t be good for anyone.”

Attribution: Bloomberg

Subediting: M. S. Salama