Slow Economic Recovery Expected in Europe

Madis Muller, a member of the European Central Bank's (ECB) Governing Council, anticipates a gradual economic recovery across Europe, acknowledging that temporary fluctuations in inflation are "inevitable." In an interview with Vikerraadio, Muller emphasized that while a modest improvement in the economic landscape may unfold, a robust growth surge or economic boom is not on the immediate horizon.

Muller highlighted that interest rates are still exerting a slight drag on economic activity, a sentiment echoed by ECB President Christine Lagarde. The ECB recently lowered its three key rates by an additional 25 basis points, with Lagarde asserting that inflation is on course to meet the 2% target. Despite Lagarde's statement that a 50 basis point rate cut in January is unlikely, Muller noted market expectations for further rate reductions totaling 100 basis points.