European Central Bank leaves rates unchanged as world's central banks wrestle with when to cut
ECB delays rate cut awaiting inflation control confirmation. Lagarde hints at future rate path. Market indexes fell on inflation concerns. June cut likely. Eurozone inflation down, guidance awaited from Lagarde.
The left its key 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.The bank's rate-setting council said in its post-decision statement that, "Most measures of underlying inflation are easing... But domestic price pressures are strong and are keeping services price inflation high."
President Christine Lagarde's news conference will be scrutinized for hints about the potential downward path of rates at future meetings.
The policy meeting at the bank's skyscraper headquarters in Frankfurt is widely regarded as a prelude to a likely rate cut at the next meeting on June 6, after Lagarde dropped a broad hint iby saying that the bank would have more information on the path of inflation at that meeting.
The decision comes as the rich world's including the and the U.S. Federal Reserve are weighing when receding inflation will let them cut rates - and make credit cheaper for businesses and consumers.
It's a policy shift closely watched by stock investors, after markets soared in recent months on expectations of lower rates by this summer. Broad indexes fell immediately in the U.S. on Wednesday and bond prices rose after a hotter than expected inflation report raised fears that the Fed may wait longer than previously thought to lower its benchmark interest rate.
Source: Stocks-Markets-Economic Times
