FxNews—After the European Central Bank (ECB) cut its main interest rates and hinted that more reductions could come, the EUR/USD currency pair slipped below $1.05, coming close to the low point of $1.04 it reached last November.
All three key interest rates were lowered by 0.25%. These cuts were a response to signs that inflation in the eurozone is growing more slowly than expected.
ECB Cuts Growth Forecast Lowers Rate Hike Expectations
In addition, the ECB removed its previous statement that interest rates needed to stay high to control prices and lowered its economic growth forecasts for the region.
It now expects this year’s economy to grow by only 0.7% (down 0.1% from before) and next year’s growth to reach just 1.1% (0.2% lower than earlier estimates). These figures are weaker than what experts predict for the United States.
In addition, political uncertainty in countries like France and Germany has put more pressure on the euro. A combination of interest rate cuts, lowered growth forecasts, and unstable politics made the euro less attractive to investors.