New year, new rate cut from the European Central Bank – but what's next? A bump up in inflation counters an overall weak economy. Live coverage of the decision and the press conference by ECB President Christine Lagarde.
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ECB hawks and doves tussle about next moves
War on the Eastern edge of the continent, tariffs potentially coming from the other side of the Atlantic – these international issues join a leadership vacuum in both Germany and France. The overall Eurozone economy is still stuck, barely registering growth.
All these reasons justify another interest rate cut to support Europe. The doves won the battle for the January 2025 decision. But, the ECB needs to keep inflation down, and prices saw a bump up in December, giving fodder to the hawks. which may push back against any imminent moves.
Christine Lagarde, the bank's president, will have to do a balancing act that may cause volatility in EUR/USD.
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(This story was corrected on June 6 at 07:45 GMT to say that the European Central Bank is set to cut interest rates for the first time since 2019, not 2020.)
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