ECB Still Postpones Rate Cut

Inflation is falling, and growth estimates have also been revised downward, to 0.6% in 2024

Christine Lagarde

The Governing Council of the European Central Bank (ECB) has decided to leave interest rates unchanged. This is the fourth time the cost of money has remained stable after 10 consecutive increases beginning in July 2022.

Although inflation has fallen further, particularly due to the lower contribution of energy prices, the three benchmark rates have been unaffected and stand at 4.5% for core refinancing, 4.75% for marginal refinancing, and 4% for central bank deposits.

“Although most measures of inflation have slowed further, domestic inflationary pressures remain, especially wage growth,” explained Christine Lagarde, President of the European Central Bank. “Economic activity remains weak, consumers continue not to spend, investment remains moderate, and companies are exporting less, but surveys point to a gradual recovery thanks to lower inflation and wages that continue to rise.”

Inflation forecasts estimate 2.3% in 2024, 2.0% in 2025, and 1.9% in 2026.

“We are in the middle of the disinflation process, we are making good progress and feeling more confident, but we are not yet confident enough.” Lagarde further explained that she was back to repeating the policy: “Keep an eye on the numbers, we need more data coming in over the next few months, we’ll know more in April and much more in June.” ECB economists also revised their growth forecasts downward, with 0.6% in 2024, 1.5% in 2025, and 1.6% in 2026.