BCE maintains interest rates at 4.5% amid inflationary outlook

The European Central Bank (ECB) has kept interest rates at 4.5%, reaching levels not seen since late 2001. This decision was widely expected, given the ECB's focus on combating inflation and its recent track record of maintaining restrictive interest rates. Although inflation has shown signs of improvement, dropping from a peak above 10.5% to around 2.6% in February, the ECB still does not feel confident enough to ease pressure on the economy by reducing interest rates. Having reacted late to previous rate hikes, the ECB prefers to be cautious to prevent inflation from accelerating again. This caution has led investors to adjust their expectations regarding potential interest rate cuts. While initially six or seven cuts were anticipated, it is now expected that there will be between three or four moves in 2024, which would place rates between 3.75% and 3.5% by the end of the year. June has been mentioned as a potential date to begin this cycle of cuts. There is keen anticipation for the press conference of Christine Lagarde, President of the ECB, where it is hoped she may provide some indication of the current confidence of the institution. Although Lagarde is likely to be cautious in her statements, analysts will be attentive to the tone of her comments to try to discern whether the ECB is considering a change in its stance. In summary, the ECB has chosen to maintain interest rates at a high level for the time being, prioritizing economic stability over a possible acceleration of inflation. Uncertainty persists regarding future monetary policy decisions, and the markets will be watching for any hints that the central bank may offer in the coming months.