Tuesday, 28 May 2024

ECB Bank keeps interest rates unchanged at a record high, hints at a cut


European Central Bank kept interest rates unchanged at a record high on Thursday but sent a clearer signal that it may be preparing to cut them as inflation in the euro zone continues to decline.

According to Reuters, the central bank of the twenty countries that deal with the single European currency kept the interest rate on deposits at 4.0%, as it has been since September, as part of an ongoing effort for a year and a half to curb prices.

But with inflation now approaching the ECB’s 2% target, bank lending stalling and the economy barely growing, the ECB has issued fresh hints about a possible rate cut at its next meeting.

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“If the Governing Council’s updated assessment of inflation expectations, core inflation movements and the strength of monetary policy leverage increases its confidence that inflation is consistently heading towards the target, it would be appropriate to reduce the current level of monetary policy restrictions,” the ECB said.