In order to combat inflation in the euro zone in the wake of the end of the health crisis and the war in Ukraine, the ECB has raised its key rates multiple times since 2022. After years during which central banks had flooded liquidity markets, this increase aimed to slow down economic players and in particular to slow down the speed of circulation of money. In October 2022, inflation had reached the rate of 10%. It has now fallen, above 3% in December 2023. In May 2024, it stands at 2.6%, after 2.4 in April.
Even if the causes of the decline in inflation are multiple – end of post-Covid bottlenecks and easing of energy prices – the ECB judges that its action has contributed to taming inflation and considers that the moment arrived to stimulate the economy again. The drop in rates should ease credit conditions for households, for consumer credit and property loans. It will also help States to refinance themselves on the markets. On the other hand, savers, who until then were the big winners from the rise in rates – the remuneration of book A, the most popular savings product in France, had increased from 0.5% to now 3% – could be penalized in the future.
