ECB expected to cut rates: benefits for public debt and consumption

The possible ECB rate cut and its implications

The Unimpresa Research Center predicts an additional 0.25% rate cut by the European Central Bank (ECB) during the meeting scheduled for October 17. If confirmed, the rate would decrease to 3.40% from the current 3.65%. This move, aimed at addressing inflation close to 2%, could bring numerous economic benefits to the eurozone, impacting three key areas: consumption, credit access, and public debt.

Impact on consumption and inflation

A lower interest rate would reduce the cost of money, encouraging consumption and promoting new investments. With inflation decreasing but still far from the 2% target, the ECB aims to foster a stable economic environment. This strategy could prevent the risk of deflation, while making investment returns more predictable and improving economic planning.

Easier access to credit

The expected rate cut on October 17 would facilitate access to credit for both households and businesses. Banks could offer loans under more favorable conditions, lowering rates on mortgages and other financing options. This would stimulate consumption and home purchases, supporting stable economic growth. On the other hand, businesses would gain access to financial resources for new investments, boosting their competitiveness in global markets.

Reduction of public debt costs

Another significant consequence of a more accommodative monetary policy concerns Italy’s public debt. With lower rates, the government could refinance its debt on better terms, reducing interest payments, which currently amount to about 100 billion euros per year. This saving would allow for the release of resources to be reinvested in infrastructure projects or essential services.