ECB cuts growth forecasts again, sees inflation settling at 2%

FRANKFURT (Reuters) - The European Central Bank cut its economic growth expectations for the euro zone once more on Thursday and confirmed it expects inflation to stabilise at its 2% target.

Having seemingly tamed once runaway prices, the ECB has been steadily cutting interest rates for six months to support sluggish economic activity in many of the 20 countries that share the euro, most notably Germany.

The euro zone's central bank now expect gross domestic product (GDP) in the currency bloc to expand by 0.7% this year, 1.1 next year and 1.4% in 2026, all revised down from the previous round of projections three months ago.

Inflation is now seen at 2.1% next year before falling to 1.9% in 2026 and 2.1% in 2027.

The following are the ECB's projections for inflation and economic growth, which include figures for 2027 for the first time. Previous projections from September are in brackets.

2024 2025 2026 2027

GDP growth: 0.7% (0.8%) 1.1% (1.3%) 1.4% (1.5%) 1.3%

Inflation: 2.4% (2.5%) 2.1% (2.2%) 1.9% (1.9%) 2.1%

(Reporting by Francesco Canepa; Editing by Catherine Evans)