The ECB and the developed world’s other central banks are tilting toward undoing some of the sharp hikes to interest rates, as US markets fell on hot inflation data.
left its key interest rate benchmark unchanged Thursday, choosing to wait for confirmation that rapidly receding inflation is firmly under control before cutting rates to support an economy that’s struggling to grow.
President Christine Lagarde’s news conference will be scrutinised for hints about the potential downward path of rates at future meetings. The decision comes as the rich world’s central banks including the ECB and the US Federal Reserve are weighing when receding inflation will let them cut rates - and make credit cheaper for businesses and consumers.
The ECB is teeing up a cut even as uncertainty grows over the prospect of a first rate cut from the US Federal Reserve. US annual inflation of 3.5 per cent in March and robust US jobs figures suggesting strong growth have led to questions about whether the Fed will carry through with the three rate cuts that it had signalled for this year. Analysts now think the US cuts could be fewer or could come later than originally expected.
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