(Reuters) – The European Central Bank (ECB) on Thursday kept its key interest rates at their current levels while predicting that inflation would decline towards its target next year, paving the way for an easing of its monetary policy.
The deposit rate was left at 4.0% for the fifth consecutive meeting.
“Inflation should fluctuate around its current levels in the coming months, before declining towards its target next year,” declared the president of the institution, Christine Lagarde, during a press conference.
However, the ECB remains “dependent on data”, underlined Christine Lagarde, adding that more elements would be available for the next meeting in June.
If upcoming data continues to confirm the slowdown in price dynamics, the Governing Council stressed in the press release accompanying its decision that “it would be appropriate to reduce the current restrictive nature of monetary policy”
This is the ECB’s first reference to rate cuts since the start of its monetary tightening cycle.
“In any event, the Governing Council will maintain a data-driven approach (…) and it does not commit in advance to a particular rate trajectory,” the press release specifies.
The decision was expected by the markets and the consensus of economists polled by Reuters.
“Even if the monetary policy decision does not mention June as the month for a first rate cut, the April meeting will likely be the last before easing,” write ING analysts.
(Written by Corentin Chappron, edited by Sophie Louet)
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