ECB expected to hold rates and move slowly towards first rate cut

On Thursday, the European Central Bank is expected to maintain record-high interest rates and gradually lower them in the upcoming months as inflation declines despite persistently high underlying price pressures.

Now, the central bank representing the 20 nations that make up the euro is hesitant to declare triumph over the most severe spell of inflation in decades, having responded too slowly to an unexpected spike in prices two years ago.

It is widely anticipated that it will maintain its record 4.0% policy rate, and ECB officials will probably reiterate their need for more proof that inflation is under control and that continued wage gains won't provide them an advantage.

However, given that the ECB's updated economic forecasts are probably going to indicate slower inflation and economic growth this year, the central bank and its head, Christine Lagarde, would need to moderate their messaging a little bit without encouraging more people to place bets on rate cuts.

For months, sources have been telling Reuters that since the ECB would not have access to key wage data until May, it is unlikely to lower borrowing costs before its June 6 meeting.

This allows the European Central Bank (ECB) to hold another meeting on April 11 and formally consider what ECB Chief Economist Philip Lane has indicated is probably going to be the first of several rate decreases.

This year, investors anticipate 91 basis points of reductions in the 4% deposit rate. The first step was taken in June, and there will be many stages with one or two pauses in between.

At 13:15 GMT, the ECB will declare its interest rate decision, and at 13:45 GMT, Christine Lagarde is scheduled to speak to the press.

(Sources: investing.com, reuters.com)