We will keep cutting rates, says ECB boss Lagarde, amid signs the eurozone economy is shrinking

Christine Lagarde vowed to keep cutting eurozone interest rates amid signs the economy continues to shrink.

Declaring that the “darkest days” of high inflation “seem to be behind us”, the European Central Bank chief said: “The direction is clear and we expected to cut rates further.”

The ECB last week cut interest rates for the fourth time this year to 3 percent in an attempt to revive the eurozone’s faltering economy.

Data firm S&P Global said yesterday that its closely watched purchasing managers’ index of activity in the region reached 49.5 this month – below the 50 mark that separates growth from decline.

That was higher than last month’s score of 48.3 – and better than expected by economists – but still indicates the eurozone economy is shrinking.

The figures also show that companies are cutting jobs at the fastest pace in four years in response to the fall in workload.

The downturn largely reflects the woes of Germany and France, the euro zone’s two largest economies, which shrank while the rest of the bloc grew.

At the heart of Germany’s woes is the collapse of its once-mighty industrial sector, amid the loss of cheap Russian energy and declining demand from China.