ECB Keeps Deposit Rates Unchanged at 4%, Cutting GDP Growth Forecast to 0.6%

The European Central Bank kept interest rates unchanged as expected, holding its deposit rate at 4%, while the refinancing rate was kept at 4.50%,

It is a wildly expected move by the market, seeing the ECB, like the US Federal Reserve, not in a big hurry to shift its policy rates though the economy in the Eurozone is more struggling than the U.S.

The market is now expecting a first rate cut from the ECB to be in June or July. About 97bps is expected to be seen this year.

The ECB now expects eurozone economic growth of 0.6% in 2024, down from the previous forecast of 0.8%. Meanwhile, the forecast for inflation was cut to 2.3% from 2.7% earlier.

“Although most measures of underlying inflation have eased further, domestic price pressures remain high, in part owing to strong growth in wages,” the ECB said.