ECB eyes June rate cut

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MG News | April 08, 2024 at 10:22 AM GMT+05:00

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April 08, 2024 (MLN): Buoyed by falling inflation, the European Central Bank is expected to keep borrowing costs on hold one last time Thursday while laying the ground for a first interest rate cut in June, as APP reported. 

The Frankfurt-based institution has left its key rates unchanged since October 2023, following an unprecedented streak of hikes to tame red-hot inflation.

ECB president Christine Lagarde said after last month's meeting that governing council members were not "sufficiently confident" yet on inflation to consider loosening the reins.

The case for rate reductions has strengthened since then, with eurozone inflation slowing more than expected in March to 2.4%, bringing the ECB's two-percent goal within reach.

However, a change of course as early as this week seems highly unlikely after ECB officials repeatedly said they were awaiting data that won't be available until their meeting on June 6.

"We will know a bit more by April and a lot more by June," Lagarde reiterated in late March, referring in particular to data on eurozone wage growth.

In June, the ECB will also have its own updated forecasts on inflation and economic growth.

Thursday's ECB meeting therefore "looks like the prelude to yet another turning point for monetary policy in the eurozone: final stop before the cut", said ING bank economist Carsten Brzeski.

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