Is the ECB’s continued rate cutting a sign of effective inflation control, or does it reveal deeper economic vulnerabilities within the Eurozone?

Rate Cut Details: The European Central Bank (ECB) lowered the deposit rate to 3.0%, down from 3.25%, marking its fourth reduction this year. Rates had peaked at a record 4.0% in June.
Easing Financing Conditions: The ECB aims to reduce borrowing costs for households and businesses, although it noted that monetary policy remains restrictive due to the lagging impact of prior hikes.
Signals for Future Policy: The ECB removed its reference to keeping rates “sufficiently restrictive,” leaving the door open for further rate cuts if economic conditions warrant.
Neutral Rate Context: Economists define the “neutral rate”—neither stimulating nor restricting growth—at around 2% to 2.5%, suggesting the ECB is still operating in restrictive territory.
Impact on Lending Rates: The weekly lending rate was cut to 3.15%, and the overnight lending rate to 3.40%, though these facilities have been minimally used due to surplus liquidity from earlier bond purchases.
End of Pandemic Bond Purchases: The ECB confirmed it will cease bond purchases under its Pandemic Emergency Purchase Programme (PEPP) this month, signaling a shift away from extraordinary monetary measures.