In August 2020, Eurostat reported a 0.2% growth in the eurozone economy for the third quarter, surpassing the expected 0.1%. This growth was driven largely by Spain (0.6%) and France (0.5%), despite political instability, while Germany and Italy faced stagnation. Following this data release, the dollar rose 0.16% to $1.1618.
The unexpected recovery in the economy comes ahead of the European Central Bank’s (ECB) monetary policy decision, relieving some pressure on the bank to cut interest rates. The ECB’s key deposit rate, currently at 2%, is expected to remain unchanged despite rising inflation, which hit 2.2% in September.
Experts believe the ECB’s rate-cutting cycle may be over for now, but caution that the situation remains fluid. Positive recent economic indicators and improving domestic demand could influence future decisions. However, analysts also suggest that further rate cuts may be possible next year, particularly as global trade and energy prices fluctuate.
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