- ORIGINAL NEWS
European Central Bank hints at June rate cut as it trims inflation forecast
- SUMMARY
The European Central Bank (ECB) has kept interest rates steady, despite concerns about the economy.
While the ECB is now more optimistic about inflation, which it expects to average 2.3% in 2024, it has lowered its GDP growth forecast for that year to 0.6%.
ECB President Christine Lagarde indicated that market expectations for a rate cut in June are in line with the bank’s views.
The ECB will closely monitor wage growth and profit margins for signs of inflation surprises.
The announcement has increased expectations of rate cuts in the summer, and the euro has weakened against other currencies.
The ECB’s key rate is currently 4%, up significantly since last year, but Lagarde suggests the bank may not wait for inflation to fully hit its target before considering further rate reductions.
- NEWS SENTIMENT CHECK
- Overall sentiment:
positive
Positive
“ECB President Christine Lagarde, meanwhile, suggested market pricing for a June rate cut was coming into line with policymakers’ outlook.”
“They presented a more positive picture on inflation, with the forecast for the year brought to an average 2.3% from 2.7%.”
Negative
“The ECB will be “laser-focused” on two areas of inflation that could surprise, namely wage growth and profit margins, Lagarde said.”
