Is Eight Interest Rate Cuts in a Year Not Enough? Eurozone Economic Growth Stagnates, Central Bank Officials Call for Further Interest Rate Cuts

On Sunday local time, Mario Centeno, a member of the European Central Bank's (ECB) Governing Council, stated that the eurozone economy is weak and requires "further stimulus" from the ECB.

Echoing this sentiment were the latest eurozone PMI figures for June, released on Monday. The data showed that economic activity in the eurozone has nearly ground to a halt, and Trump's tariffs could bring even more gloom to the European economy.

The ECB still needs to continue cutting interest rates.

Earlier this month, to stimulate economic recovery, the ECB just carried out its eighth interest rate cut in the past year. Following this cut, the deposit facility rate, the main refinancing rate, and the marginal lending rate in the eurozone fell to 2.00%, 2.15%, and 2.40%, respectively.

After the June interest rate cut, the ECB clearly signaled that it would pause interest rate cuts in July. However, Mario Centeno, a member of the ECB's Governing Council, recently stated that he supports further interest rate cuts in the future.

"The ECB's interest rate level must be compatible with an economic environment that can generate stable inflation of 2%. Today, in my view, such an economic environment does not yet exist in the eurozone," he commented. "The (European) supply and demand situation is still too weak to return to the target level without further stimulus."

He believes that regarding the ECB's target interest rate level, "this is a decision that needs to be made meeting by meeting," "but we must remember that for the concept of the neutral interest rate to work, the price level and economic conditions in Europe must be balanced. And currently, the (European) economy remains weak."

European economic activity has nearly stalled.

The latest PMI figures released on Monday showed that economic activity in the eurozone nearly stalled in June.

The data indicated that the flash estimate of the eurozone's composite PMI for June remained at 50.2, unchanged from May. This figure is only slightly above the 50 threshold that separates expansion from contraction and falls short of market expectations of 50.5.

The flash estimate of the eurozone's manufacturing PMI for June was 49.4, slightly below the 50 threshold, showing no signs of improvement from the previous reading of 49.8; the flash estimate of the services PMI was 50, in line with expectations, and exactly at the expansion-contraction threshold.

This data is regarded as a reliable indicator for assessing economic growth in the eurozone. Based on this indicator, as the second quarter draws to a close, the eurozone economy is still struggling to gain growth momentum.

Cyrus de la Rubia, chief economist at Hamburg Commercial Bank, stated that the eurozone economy is struggling to gain growth momentum. Growth has been minimal over the past six months. Despite signs of slight improvement in Germany's economic situation, France's economy continues to lag behind.

On May 19 this year, the European Commission released its Spring 2025 Economic Forecast report, significantly downgrading its growth expectations for the European economy. It is projected that the EU's real GDP will grow by 1.1% in 2025, while the Eurozone's real GDP growth rate will be only 0.9%.

The European Commission stated that the US's tariff policies are disrupting global trade, casting a shadow over Europe's economic outlook. If trade tensions persist in the future, it could further dampen EU economic growth.