ECB Rejects Hawkish Stance, Holds Interest Rate At 4% As Eurozone Inflation Crashes

The European Central Bank held interest rates but hinted it may consider a cut at its next meeting in June.

The Governing Council decided to keep the three key ECB interest rates unchanged.

The key interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility were unchanged at 4.50 per cent, 4.75 per cent and 4.00 per cent respectively.

“The incoming information has broadly confirmed the Governing Council’s previous assessment of the medium-term inflation outlook. Inflation has continued to fall, led by lower food and goods price inflation,” the ECB said in a statement on Thursday.

Eurozone inflation has fallen from a 2022 peak of 10.6 per cent to 2.4 per cent in March, which is close to the bank’s target.

In a news conference after the announcement, ECB President Christine Lagarde said, “Price pressures are gradually diminishing” adding “Inflation to fluctuate around current levels in coming months.”

The ECB boss believes that inflation will decline to the bank’s target next year.

Lagarde further hinted that “Risks to growth are tilted to the downside.”