The European Central Bank (ECB) has decided to maintain record-high borrowing costs at 4%, indicating that while inflation was decreasing faster than anticipated, it was not yet prepared to lower interest rates, Reuters reports.
Despite the decrease in inflation over the past 18 months and revised economic projections, ECB President Christine Lagarde stated that the bank remains cautious and will reassess the situation in June. The ECB lowered its forecast for inflation for this year from 2.7% to 2.3% and noted that while some measures of underlying inflation were easing, domestic price pressures remain high due to strong wage growth.
Economic growth in the eurozone is expected to be weaker, with GDP projected to expand by 0.6%, down from the previous estimate of 0.8%. The ECB is unlikely to cut rates before June, waiting for crucial data on wages to become available in May, with expectations of potential rate cuts later in the year.
