The European Central Bank left interest rates unchanged for a fourth meeting as a softer outlook for inflation and economic growth fed expectations for cuts to begin in June.
The deposit rate was kept at a record 4% — as all economists surveyed by Bloomberg predicted. The Governing Council reiterated that maintaining this level of borrowing costs for "sufficiently long" will make a "substantial contribution" to returning consumer-price growth to the 2% goal.
"The Governing Council will continue to follow a data-dependent approach to determining the appropriate level and duration of restriction," the ECB said Thursday in a statement.
The ECB, like the Federal Reserve and the Bank of England, is contemplating when to sound the all-clear on inflation and begin undoing the unprecedented monetary tightening deployed to subdue it. While price growth in the 20-nation euro zone is nearing the target, policymakers there are wary of cutting too soon and want assurance that wage increases are under control.
Their latest quarterly outlook puts inflation at 2.3% this year — down from 2.7% in December — and revises the 2025 forecast down to 2%. The economy, meanwhile, is seen expanding by 0.6% in 2024 versus 0.8% previously.
President Christine Lagarde will hold a news conference at 2:45 p.m. in Frankfurt, though several officials had to participate in this week's meeting remotely as strikes in Germany scuppered their travel plans.
Investors will look to Lagarde for signals on whether expectations for a first rate cut in June remain valid. She may also be quizzed about a festering spat with ECB staff over freedom of debate and climate policy.
Source : Bloomberg
