Industries

Helping clients meet their business challenges begins with an in-depth understanding of the industries in which they work. That’s why KPMG LLP established its industry-driven structure. In fact, KPMG LLP was the first of the Big Four firms to organize itself along the same industry lines as clients.

How We Work

We bring together passionate problem-solvers, innovative technologies, and full-service capabilities to create opportunity with every insight.

Learn more

Careers & Culture

What is culture? Culture is how we do things around here. It is the combination of a predominant mindset, actions (both big and small) that we all commit to every day, and the underlying processes, programs and systems supporting how work gets done.

Learn more

Europe eases again

Inflation has been in decline for nearly two years.

September 12, 2024

The European Central Bank (ECB) voted to decrease its key short-term rate by one-quarter point to 3.5% in a unanimous decision. This was the second rate cut of the cycle, following an initial cut in June.

The ECB’s single mandate for price stability puts inflation center stage. Its forecasts have remained steady with inflation expected to return to a 2% target during the second half of next year.

European Union (EU) inflation has been in decline for almost two years. Services inflation has proven sticky and now accounts for nearly three-quarters of inflation across the Eurozone. Inflation-adjusted wages recently rose at the fastest pace in the Eurozone’s 25-year history. Upcoming contract negotiations could cause wage gains to be high due to the nature of the process. However, the ECB’s expectations for slowing wage growth, lower corporate profits and increasing productivity provide optimism that services inflation should moderate next year.

ECB President Christine Lagarde was adamant in the press conference following the meeting, saying the bank will “continue to follow a data dependent and meeting-by-meeting approach… we are not pre-committing to a particular rate path.” She repeated this refrain several times. The majority of Governing Council members are inflation hawks who will likely want to see progress on services inflation prior to another cut.

Policy has been restrictive enough for President Lagarde to remark that “the footprint of our monetary policy in the real economy has been visible.” Credit growth is weak; household consumption remains muted even with higher wages.

The EU avoided a technical recession to close out 2023, but 2024 growth has been poor. The bloc’s economy grew 0.2% in the second quarter, a tick lower than the 0.3% growth of the first quarter driven by net exports and government spending. Private demand and household consumption were drags on the European economy.

The ECB remains data dependent, which is vastly different from data-point dependent. It is looking for sustained progress on inflation, not just a good month driven by energy price declines. With inflation in decline and growth set to rise in 2025 and 2026, the ECB is likely to hold rates flat at the October meeting and conduct another one-quarter point cut in December. 

Another rate cut this year is likely as the ECB attempts to stimulate.

Benjamin Shoesmith, KPMG Senior Economist

Bottom Line

Sluggish growth needs a lift so inflation in retreat and cutting rates will provide firms and consumers with a boost. Another rate cut this year is likely as the ECB attempts to stimulate an economy marked by not just restrictive lending conditions but also major challenges such as aging demographics, political tensions and nearby armed conflict. 

Explore more

Subscribe to insights from KPMG Economics

KPMG Economics distributes a wide selection of insight and analysis to help businesses make informed decisions.

Meet our team

Image of Benjamin Shoesmith
Benjamin Shoesmith
Senior Economist, KPMG Economics

Thank you

Thank you for subscribing. You should receive a confirmation e-mail soon.

Subscribe to insights from KPMG Economics

Now more than ever, companies are using data to make informed decisions about the future of their business. KPMG Economics is continuously monitoring and analyzing economic and geopolitical data so we can provide business leaders with reliable and timely insight and analysis.

To receive our Economic Updates and other relevant content published by the KPMG Economics as soon as it is released, please provide the following details:

By submitting, you agree that KPMG LLP may process any personal information you provide pursuant to KPMG LLP's Privacy Statement.

An error occurred. Please contact customer support.

Thank you!

Thank you for contacting KPMG. We will respond to you as soon as possible.

Contact KPMG

Use this form to submit general inquiries to KPMG. We will respond to you as soon as possible.

By submitting, you agree that KPMG LLP may process any personal information you provide pursuant to KPMG LLP's Privacy Statement.

An error occurred. Please contact customer support.

Job seekers

Visit our careers section or search our jobs database.

Submit RFP

Use the RFP submission form to detail the services KPMG can help assist you with.

Office locations

International hotline

You can confidentially report concerns to the KPMG International hotline

Press contacts

Do you need to speak with our Press Office? Here's how to get in touch.

Headline