The European Central Bank is expected to keep interest rates unchanged at today’s Governing Council meeting, as policymakers wait for clearer signals on inflation and growth.
Markets broadly expect the deposit facility rate to remain at 2%, with the ECB likely to avoid any immediate move while it assesses incoming economic data.
ECB President Christine Lagarde has repeatedly stressed that monetary policy will remain data-dependent, with decisions taken meeting by meeting rather than following a predetermined path.
The central bank faces a difficult balancing act. Renewed energy pressures and geopolitical tensions have raised inflation concerns, while economic growth is slowing and tighter lending conditions are weighing on activity.
Most analysts expect the ECB to stand pat for now, while leaving the door open to action from June onwards if inflationary pressures prove more persistent.
Lagarde’s message is expected to be one of caution in the short term, combined with readiness to act if price pressures intensify.
Source: CNA