The ECB maintains its rates
On Thursday, the European Central Bank opted to keep its key interest rate benchmark unchanged, preferring to await confirmation that swiftly diminishing inflation is effectively managed before considering rate cuts to bolster a faltering economy. According to the bank’s rate-setting council, as stated in its post-decision release, although most indicators of underlying inflation are diminishing, robust domestic price pressures persist, contributing to elevated services price inflation.
The gathering at the bank‘s towering headquarters in Frankfurt is commonly seen as a precursor to a probable rate reduction at the upcoming meeting on June 6, especially since Lagarde hinted at this possibility by mentioning that the bank would gain further insights into the trajectory of inflation by then.
This move coincides with deliberations among major central banks in the developed world, including the ECB and the U.S. Federal Reserve, as they assess when declining inflation will enable them to implement rate cuts, thereby reducing the cost of credit for both businesses and consumers.
