ECB Press Conference: Lagarde comments on policy outlook after cutting key rates by 25 bps

Christine Lagarde, President of the European Central Bank (ECB), explains the ECB's decision to lower key rates by 25 basis points at the April policy meeting and responds to questions from the press.

Follow our live coverage of the ECB policy announcements and the market reaction.

ECB press conference key takeaways

"The economic outlook is clouded by uncertainty."

"Trade disruptions, uncertainty, weigh on investment."

"The economy is likely to have grown in the first quarter."

"Manufacturing is showing stabilisation."

"Defence, infrastructure spending to bolster manufacturing."

"Competitiveness compass should be swiftly implemented."

"Inflation has declined."

"Downside risks have increased."

"Geopolitical tensions a major source of uncertainty."

"Trade disruptions add uncertainty to inflation."

"Strong Euro could push down inflation."

"Adverse financial market reactions could lower inflation."

"Higher import prices could increase inflation."

"The decision was unanimous."

"Options were debated, no one argued for 50 bps cut."

"Tariffs are a negative demand shock."

"Net impact of tariffs on inflation only clearer over time."

"There are diverging views on short- and long-term impact, developments."

"Meaningless to assess restrictiveness now."

"Neutral rate works in a shock-free world."

"We need to determine appropriate stance for destination."

"Stance to be determined by readiness."

"Agility is second element to determine stance."

"We need to rely on safe, reliable data."

"We'll use whatever instrument is appropriate."

"A number of governors a few weeks ago would've argued in favour of skipping a rate cut."

"Other governors thought a few weeks ago it might warrant a 50 bps cut."

"Most obvious EU response is zero for zero tariff offer."

"There will be re-routing of goods."

"Tariffs impact is possibly negative on growth."

"Relationship among central bankers is steady and solid."

This section below was published at 12:15 GMT to cover the European Central Bank's (ECB) monetary policy announcements and the immediate market reaction.

The European Central Bank (ECB) announced on Thursday that it lowered key rates by 25 basis points (bps) following the April policy meeting, as expected. With this decision, the interest rate on the main refinancing operations, the interest rates on the marginal lending facility and the deposit facility stood at 2.4%, 2.65% and 2.25%, respectively.

Key takeaways from ECB policy statement

"Inflation has continued to develop as staff expected, with both headline and core inflation declining in March."

"Euro area economy has been building up some resilience against global shocks, but outlook for growth has deteriorated owing to rising trade tensions."

"Increased uncertainty is likely to reduce confidence among households and firms, and adverse and volatile market response to trade tensions is likely to have a tightening impact on financing conditions."

"These factors may further weigh on economic outlook for Euro area."

"Especially in current conditions of exceptional uncertainty, will follow a data-dependent and meeting-by-meeting approach to determining appropriate monetary policy stance."

"Interest rate decisions will be based on its assessment of inflation outlook in light of incoming economic and financial data, dynamics of underlying inflation and strength of monetary policy transmission."

"ECB is not pre-committing to a particular rate path."

"Pandemic Emergency Purchase Programme (PEPP) and APP portfolios are declining at a measured and predictable pace, as Eurosystem no longer reinvests principal payments from maturing securities."

Market reaction to ECB policy decisions

EUR/USD retreated slightly with the immediate reaction to the ECB's policy announcements. At the time of press, the pair was down 0.42% on the day at 1.1350.

This section below was published as a preview of the European Central Bank's policy announcements at 07:00 GMT.

• The European Central Bank is expected to lower key rates by 25 bps on Thursday.
• The focus will be on the ECB's statement language and President Christine Lagarde’s comments.
• The EUR/USD pair braces for intense volatility on the ECB policy announcements.

The European Central Bank (ECB) will announce its April interest rate decision on Thursday at 12:15 GMT. Markets widely expect the central bank to lower key rates for the sixth consecutive time.

ECB President Christine Lagarde will hold a press conference at 12:45 GMT. At this conference, she will deliver the prepared statement on monetary policy and respond to questions from the media.

The Euro (EUR) remains poised for a big reaction to the ECB announcements against the US Dollar (USD).

What to expect from the European Central Bank interest rate decision?

The ECB is set to deliver another 25 basis points (bps) cut after the April policy meeting, reducing the benchmark rate on the deposit facility to 2.25% from 2.5%, with the disinflation process remaining on track.

Data released by Eurostat showed that the Harmonized Index of Consumer Prices (HICP) in the Eurozone rose 2.2% year-over-year (YoY) in March, after recording a 2.3% increase in February. Additionally, the annual core HICP inflation softened to 2.4% from 2.6% in the same period.

Investors will scrutinize the policy statement to see how the ECB expects the United States’ new trade regime to impact the inflation outlook and growth prospects in the European Union (EU).

Previewing the ECB’s April meeting, TD Securities analysts said they forecast a 25 bps reduction in rates. “Key focus in the press conference should be on economic uncertainty pertaining to trade policies and global demand going forward. As such, wording on future rate path is likely to be vague and stress data dependency,” analysts noted.

Earlier in the month, ECB Governing Council member Gediminas Šimkus argued that the US tariff decisions warrant a more accommodative monetary policy and added that a 25 bps cut will be needed in April. Although the US and the EU agreed to a 90-day pause in reciprocal tariffs since then, there are still a lot of uncertainties regarding what the EU-US trade relations will look like after the grace period. Citing people familiar with discussions, Bloomberg reported earlier this week that the EU was expecting a bulk of the US import tariffs to remain in place after little progress was made in negotiations that took place on Monday.

How could the ECB meeting impact EUR/USD?

EUR/USD gained more than 4% in March and is already up about 5% since the beginning of April. During this period, the intense selling pressure surrounding the US Dollar (USD) on growing fears over an economic downturn as a result of deepening trade conflicts fuelled the pair’s rally.

In case the ECB policy statement, or President Lagarde, suggests that they remain confident about the disinflation process resuming, despite the tariff uncertainty, investors could see this as a sign of further policy-easing in the near future. A pessimistic tone about the economic outlook could reaffirm this view. In this scenario, the Euro could come under selling pressure with the immediate reaction, opening the door to a downward correction in EUR/USD.

On the other hand, the Euro could continue to outperform the USD if the ECB puts more emphasis on upside inflation risks and signals a possible pause in rate cuts, citing the need for more time to assess the impact of tariffs.

Eren Sengezer, European Session Lead Analyst at FXStreet, offers a brief technical outlook for EUR/USD:

“EUR/USD trades near the upper limit of a two-month-old ascending regression channel and the Relative Strength Index (RSI) indicator on the daily chart holds above 70, suggesting that the pair could stage a technical correction before the next leg higher.”

“On the downside, the mid-point of the ascending channel aligns as a key support level at 1.1200. If EUR/USD makes a daily close below this level, 1.1100 (static level) could be seen as interim support ahead of 1.1000 (psychological level, 20-day Simple Moving Average). Looking north, resistances could be spotted at 1.1435 (upper limit of the ascending channel), 1.1500 (round level, static level) and 1.1580 (static level),” Sengezer added.