The Eurozone’s services PMI (Purchasing Managers’ Index) saw a decline in October, raising concerns about the region’s economic outlook. The drop in services activity signals weakening demand in one of the most crucial sectors of the European economy. This contraction in services is being interpreted as an indicator of broader economic sluggishness, with analysts now predicting that the European Central Bank (ECB) may respond by cutting interest rates by 25 basis points in December .
This anticipated rate cut would mark a shift in the ECB’s policy, as it continues to grapple with balancing inflation control against supporting economic growth. The weakening services sector highlights the growing economic pressures faced by the Eurozone, including challenges from global trade dynamics and slowing domestic consumption. A potential ECB rate cut would be aimed at stimulating economic activity but may come at the cost of further weakening the euro against other major currencies.
