The European Central Bank cut interest rates for the first time in five years on Thursday, lowering them from a record high by 25 basis points to 3.75 per cent.
The move is seen as the start of an easing cycle, but lingering price and wage pressures are clouding the outlook and may force the euro zone's central bank to wait months before cutting again.
In lowering the rate, the bank has joined institutions in Canada, Sweden and Switzerland in starting to unwind steep rate increases used to tame a post-pandemic inflation surge.
“The governing council will continue to follow a data-dependent and meeting-by-meeting approach to determining the appropriate level and duration of restriction,” the ECB said.
While the bank kept open its options for July, a string of influential policymakers, including board member Isabel Schnabel and Dutch central bank chief Klaas Knot have already made the case for a pause next month, suggesting the next window of opportunity for easing will be in September.
Economists expect another two rate cuts from the ECB this year, most likely in September and December, while markets are pricing between one and two additional moves – a big change from the start of the year, when more than five cuts were anticipated.
“Interest rate decisions will be based on its assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission,” the ECB added. “The governing council is not pre-committing to a particular rate path.”
Conservative policymakers, who still appear to command a majority on the rate-setting governing council, have argued that the ECB is not in any hurry to cut since a rebound in the economy proves high rates are not choking off growth.
Part of their caution may be due to unexpectedly stubborn inflation. The ECB raised its 2025 inflation projection to 2.2 per cent on Thursday from 2.0 per cent.
“Despite the progress over recent quarters, domestic price pressures remain strong as wage growth is elevated, and inflation is likely to stay above target well into next year,” the central bank said.
Some economists say the biggest risk to the rate cut schedule is the US Federal Reserve, not wages and inflation.
The Fed has clearly signalled a delay in policy easing, and a further delay in US rate cuts is likely to make the ECB more cautious too, as a widening interest rate differential would weaken the euro and raise imported inflation.
Attention now turns to ECB President Christine Lagarde's press conference, where she is likely to be grilled about the ECB's likely next moves.
MATCH INFO
Champions League quarter-final, first leg
Ajax v Juventus, Wednesday, 11pm (UAE)
Match on BeIN Sports
Civil%20War
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'C'mon C'mon'
Director:Mike Mills
Stars:Joaquin Phoenix, Gaby Hoffmann, Woody Norman
Rating: 4/5
Key products and UAE prices
iPhone XS
With a 5.8-inch screen, it will be an advance version of the iPhone X. It will be dual sim and comes with better battery life, a faster processor and better camera. A new gold colour will be available.
Price: Dh4,229
iPhone XS Max
It is expected to be a grander version of the iPhone X with a 6.5-inch screen; an inch bigger than the screen of the iPhone 8 Plus.
Price: Dh4,649
iPhone XR
A low-cost version of the iPhone X with a 6.1-inch screen, it is expected to attract mass attention. According to industry experts, it is likely to have aluminium edges instead of stainless steel.
Price: Dh3,179
Apple Watch Series 4
More comprehensive health device with edge-to-edge displays that are more than 30 per cent bigger than displays on current models.
Benefits of first-time home buyers' scheme
- Priority access to new homes from participating developers
- Discounts on sales price of off-plan units
- Flexible payment plans from developers
- Mortgages with better interest rates, faster approval times and reduced fees
- DLD registration fee can be paid through banks or credit cards at zero interest rates
The Sand Castle
Director: Matty Brown
Stars: Nadine Labaki, Ziad Bakri, Zain Al Rafeea, Riman Al Rafeea
Rating: 2.5/5
The%20specs
%3Cp%3E%3Cstrong%3EEngine%3A%20%3C%2Fstrong%3E2.3-litre%204cyl%20turbo%0D%3Cbr%3E%3Cstrong%3EPower%3A%20%3C%2Fstrong%3E299hp%20at%205%2C500rpm%0D%3Cbr%3E%3Cstrong%3ETorque%3A%20%3C%2Fstrong%3E420Nm%20at%202%2C750rpm%0D%3Cbr%3E%3Cstrong%3ETransmission%3A%20%3C%2Fstrong%3E10-speed%20auto%0D%3Cbr%3E%3Cstrong%3EFuel%20consumption%3A%20%3C%2Fstrong%3E12.4L%2F100km%0D%3Cbr%3E%3Cstrong%3EOn%20sale%3A%20%3C%2Fstrong%3ENow%0D%3Cbr%3E%3Cstrong%3EPrice%3A%20%3C%2Fstrong%3EFrom%20Dh157%2C395%20(XLS)%3B%20Dh199%2C395%20(Limited)%3C%2Fp%3E%0A
RESULTS
5pm: Maiden (PA) Dh80,000 1,600m
Winner: Omania, Saif Al Balushi (jockey), Ibrahim Al Hadhrami (trainer)
5.30pm: Conditions (PA) Dh85,000 1,600m
Winner: Brehaan, Richard Mullen, Ana Mendez
6pm: Handicap (TB) Dh100,000 1,600m
Winner: Craving, Connor Beasley, Simon Crisford
6.30pm: The President’s Cup Prep (PA) Dh100,000 2,200m
Winner: Rmmas, Tadhg O’Shea, Jean de Roualle
7pm: Wathba Stallions Cup (PA) Dh70,000 1,200m
Winner: Dahess D’Arabie, Connor Beasley, Helal Al Alawi
7.30pm: Handicap (PA) Dh80,000 1,400m
Winner: Fertile De Croate, Sam Hitchcott, Ibrahim Aseel
Profile
Company: Justmop.com
Date started: December 2015
Founders: Kerem Kuyucu and Cagatay Ozcan
Sector: Technology and home services
Based: Jumeirah Lake Towers, Dubai
Size: 55 employees and 100,000 cleaning requests a month
Funding: The company’s investors include Collective Spark, Faith Capital Holding, Oak Capital, VentureFriends, and 500 Startups.
Killing of Qassem Suleimani
MATCH INFO
AC Milan v Inter, Sunday, 6pm (UAE), match live on BeIN Sports
Quick facts on cancer
- Cancer is the second-leading cause of death worldwide, after cardiovascular diseases
- About one in five men and one in six women will develop cancer in their lifetime
- By 2040, global cancer cases are on track to reach 30 million
- 70 per cent of cancer deaths occur in low and middle-income countries
- This rate is expected to increase to 75 per cent by 2030
- At least one third of common cancers are preventable
- Genetic mutations play a role in 5 per cent to 10 per cent of cancers
- Up to 3.7 million lives could be saved annually by implementing the right health
strategies
- The total annual economic cost of cancer is $1.16 trillion
