The European Central Bank is cutting its key interest rate, a step to boost an economy that’s struggling to grow as consumers burned by inflation warily eye price tags and businesses try to chart a course amid political turmoil in leading economies France and Germany.

EUR/CAD receives downward pressure amid rising odds of further interest rate cuts by the European Central Bank.

Europe's economy stagnated at the end of last year as former growth engine Germany floundered to the end of a second straight year of shrinking output, officials said Thursday.

The euro zone economy stagnated last quarter as worried consumers zipped up their purses, adding to fears that a long-predicted recovery could be further delayed, Eurostat data showed on Thursday.

Economists polled by Reuters had expected growth of 0.1% over the period, following a larger-than-expected 0.4% expansion in the third quarter.

The eurozone economy failed to grow in the fourth quarter of 2024, marking a sharp slowdown from the previous quarter and missing expectations for modest expansion. Flash figures released by Eurostat on Thursday showed that gross domestic product (GDP) was unchanged from the previous quarter,

The euro zone economy experienced stagnation last quarter as reluctant consumers curbed spending, casting doubt on recovery prospects. Factors like Germany's contraction and high energy costs contribute to the slowdown.

Germany’s public debt currently stands at 62%, according to Eurostat data, thus twenty points below the EU average and much lower than in other G7 economies – all of which have a government debt level of above 100% of GDP.

Europe’s economy stagnated late last year as its former growth engine, Germany, finished a second straight year of shrinking output.

The ECB's deposit rate was cut to 2.75% from 3%, the lowest in nearly two years. It was the fifth cut by the ECB in its last six meetings, and came after the Federal Reserve on Wednesday stood pat on rates and signaled it was in no hurry to deliver further cuts.

Policymakers at the European Central Bank and in European capitals had hoped that cooling inflation rates and a rapid rise in wages would spur a strong enough rise in consumer spending to drive a recovery in 2024. The ECB on Thursday moved to lower rates for a fifth time in a little over a year.