The European Central Bank signals a rate cut in June
The European Central Bank met on Thursday, held interest rates at 4% and signalled a rate cut in June.
When Christine Lagarde, who chairs the ECB, was asked if she was worried about diverging from the Fed (who will likely not cut as US inflation has turned upwards again), she replied that people should not assume eurozone inflation will mirror US inflation.
Here is the chart comparing Eurozone inflation to US inflation:
She also said she wouldn't wait till inflation is at 2% in all eurozone countries before deciding to cut! Of the 17 members of the eurozone, only two have inflation at or below 2% (which is the ECB's mandate). Here is how inflation stands among the members:
The conclusion has to be that she's decided to cave to pressure for a cut from France, Germany and Italy. And that she's confident that inflation will continue to decline in April and May.
