European Central Bank (ECB) President Christine Lagarde during a press conference on the interest rate decision in Frankfurt, Germany, Thursday, March 7, 2024.
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The European Central Bank kept interest rates on hold for the fifth consecutive meeting on Thursday as expectations for a rate cut in June grew.
“If the Board of Governors’ updated assessment of the inflation outlook, underlying inflation dynamics and the strength of monetary policy transmission further strengthens its confidence that inflation will continue to converge towards target, an appropriate reduction in the current inflation rate will be appropriate.” Monetary Policy policy limits,” it said in a statement.
The ECB made no direct mention of easing monetary policy in its previous communiqué.
In September, the central banks of 20 euro zone countries raised key interest rates to a record high of 4%. This ratio remains the same for every gathering thereafter.
Policymakers and economists are eyeing June as the month when interest rates could begin, after the European Central Bank cut its medium-term inflation forecast. Since then, price growth in the euro zone has cooled more than expected in March.
The European Central Bank said on Thursday that incoming information “broadly confirmed” its medium-term outlook, with falling food and commodity prices leading to lower inflation.
June will also be the first month that policymakers have a full set of data on first-quarter wage negotiations – an area of concern over potential inflationary impacts.
According to LSEG data, market pricing indicates a 25 basis point cut in June.
In the United States, expectations for a summer rate cut have weakened sharply following higher-than-expected inflation data this week.
Riksbank Deputy Governor Per Jansson said in comments reported by Reuters on Thursday that if the Fed rules out an interest rate cut in 2024, it could cause “problems” for the Riksbank and the European Central Bank.
In the case of the Riksbank, this may be due to the weaker Swedish krona fueling inflation, Jansson said explain in a speech.
