European Central Bank President Christine Lagarde will likely push back against expectations for quick interest rate cuts even as Europe’s economy sputters and financial markets froth in hopes of cheaper credit that would boost business activity and stock prices, David McHugh reported for the Associated Press (AP).
The ECB’s next move would likely be a cut to borrowing costs this summer but said its benchmark rate will need to stay at a record high for “as long as necessary” to unequivocally squelch inflation.
She will likely underline that the bank needs to see more proof that painful inflation — which has made everything from groceries to energy more expensive — has been beaten down, analysts say.
Lagarde has indicated that the ECB’s next move would likely be a cut to borrowing costs this summer but said its benchmark rate will need to stay at a record high for “as long as necessary” to unequivocally squelch inflation.
The ECB leader is faced with financial markets that are anticipating cuts as early as April, and stock prices that have risen and fallen depending on hopes for a boost from lower rates.
Lagarde has cautioned that the bank will make decisions based on the latest figures about the economy’s health rather than making longer-term promises. The ECB is expected to leave rates unchanged during Thursday’s meeting at its Frankfurt headquarters.
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