The European Central Bank left its key interest rates unchanged on Thursday, but signaled policymakers are gaining confidence on inflation returning to the 2 percent target and could lower rates in coming months.
(Bloomberg) European Central Bank officials who until recently had been wary of even discussing interest-rate cuts now look increasingly open to commencing them in June.Most Read from BloombergBlinken Stranded After Boeing 737 Breaks Down on Davos TripApple to Sell Watches Without Oxygen Feature After Legal SetbackSingapore Minister Quits After Biggest Graft Case Since 1986Stocks Drop as Solid Data Fuel Fed-Pivot Repricing: Markets WrapDimon Says China Risk-Reward Equation Has ‘Changed Dramat
The ECB raised interest rates to a record high earlier this year but unexpectedly benign inflation data over the past few months has all but ruled out further policy tightening, shifting the debate to how fast it will reverse course.
The European Central Bank froze borrowing costs again on Thursday but warned that inflation could pick up again in the near term, in an apparent pushback against market hopes of early rate cuts in 2024.The ECB's warning will likely be aimed at cooling investor expectations of faster rate cuts in 2024.
With inflation dropping faster than expected and the economic outlook darkening, markets will be looking for clues about when eurozone borrowing costs might start to come down as rate-setters meet this week.But all eyes will be on whether the ECB gives any indications of when borrowing costs the key deposit rate is currently sitting at a record high will start to be reduced.