The European Central Bank is under pressure to cut interest rates

The European Central Bank meets later this week and is under pressure to signal that they will cut interest rates in their June meeting. The pressure is coming from the three big eurozone economies, Germany, France and Italy, as their economies flirt with recession.

The problem for the ECB is that there is still a huge spread in inflation rates within the eurozone, from 1% in Latvia to 4.2% in Austria. Latvia really needs the rate cut, but cutting too soon could send inflation in Austria shooting back up.

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There is another factor they need to consider, which is the exchange rate. If the ECB cuts but the Fed does not, the euro will weaken and they'll start importing inflation as dollar-denominated goods like oil become expensive to buy with a weakened euro.

The trouble is, it doesn't look like the Fed will cut rates this year. Which makes it difficult for the ECB to do so.