FXstreet.com (Barcelona) - The Financial turmoil has intensified in the last month and its negative consequences over global economy have enhanced, accentuating the global slowdown, which will last for at least the next quarters, according to the latest Monthly Bulletin by the European Central Bank.
In regards to inflation, Eurozone CPI has continued moderating at a fast pace, due, partly to the further weakening in the economic outlook. The Bank expects inflation to be in line with the ECB's margin for price stability in the medium-term, supporting purchasing power of incomes and savings.
In this context, the Bank considered a 50 basis points rate cut to 2.0% as the most appropriate approach to keep price stability broadly balanced over the medium term, in a period of significant slowdown in the Euro Area.
The economic slowdown Euro Zone is facing has worsened in the last months on the back of the broadening and intensification of the financial turmoil. The Bank warns that both global as well as domestic demand will remain dampened for a protracted period, which will weaken further economic activity.
The Bank states that economic uncertainty remains exceptionally high, while reaffirms its commitment to keep inflation expectations firmly anchored in line with its medium-term objective of inflation rates below, but close to, 2%, which, according to the ECB, will support sustainable growth and employment contributing to financial stability.