Financial markets are jonesing for interest rate cuts. Not so fast, says the European Central Bank
The European Central Bank will likely keep interest rates unchanged Thursday
By DAVID McHUGH
Published - Jan 25, 2024, 12:06 AM ET
Last Updated - Jan 25, 2024, 12:06 AM EST
FRANKFURT, Germany (AP) — European Central Bank President Christine Lagarde will likely push back Thursday against expectations for quick interest rate cuts even as Europe's economy sputters and financial markets froth in hopes of cheaper credit that would boost business activity and stock prices.
Lagarde has indicated that the ECB's next move would likely be a cut to borrowing costs this summer but said its benchmark rate will need to stay at a record high for “as long as necessary” to unequivocally squelch inflation.
The ECB leader is faced with financial markets that are anticipating cuts as early as April, and stock prices that have risen and fallen depending on hopes for the boost from lower rates.