The euro-zone activity outlook has weakened further, but September’s dramatic financial market and banking sector developments have obviously grabbed the limelight. With a number of euro-zone governments stepping in to rescue ailing banks, it is clear that the region’s banking system is suffering the effects of the credit crunch too. As President Trichet has stressed that the ECB will continue to keep monetary policy and measures to aid financial markets completely separate, imminent interest rate cuts so far look unlikely. Nonetheless, as inflation slows further, we expect the ECB’s attention to turn to the weakening real economy and see rates eventually reaching 3.0% by the end of 2009.
Become a client to read more
This is premium content that requires an active Capital Economics subscription to view.
Already have an account?
You may already have access to this premium content as part of a paid subscription.
Sign in to read the content in full or get details of how you can access it
Register for free
Sign up for a free account to:
- Unlock additional content
- Register for Capital Economics events
- Receive email updates and economist-curated newsletters
- Request a free trial of our services