According to Jinshi Data, Jack Allen-Reynolds, a macroeconomist at Capital Economics, said that the boost to eurozone economic growth from rate cuts in the next one or two years will be very small. Since the European Central Bank will only gradually reduce interest rates and keep them above pre-pandemic levels, private sector borrowing costs will not fall significantly, interest payments for households and businesses will remain high, and loan growth will be limited.
If the economy performs much worse than expected, the ECB may ease policy more quickly, but this will only cushion the negative shock rather than help growth. However, GDP should continue to expand due to rising eurozone incomes and improving global economic activity.