ECB Maintains Rates Amid Inflation Forecast Revisions

The European Central Bank signaled it may have concluded its rate cuts, as it elevated inflation predictions for 2023 and 2024. ECB President Christine Lagarde emphasized uncertainty in the economic outlook, maintaining a 2% key rate. Inflation and growth forecasts were adjusted, affecting trader expectations of future rate movements.

The European Central Bank (ECB) on Thursday affirmed market predictions that it might have ended rate cuts, while raising its inflation forecasts for this year and the next. Despite this, traders have hesitated to predict when the first interest rate hike might occur.

ECB President Christine Lagarde highlighted the prevailing uncertainty, maintaining that the bank would keep its options open. The ECB held its key rate steady at 2% for the fourth consecutive meeting, with Lagarde asserting that current policy remains in a 'good place'.

Economic strategist Divyang Shah described Lagarde's comments as a pivotal counter to previous statements that had fueled rate hike speculations. After the ECB's decision, U.S. economic data contributing to lower Treasury yields also impacted European markets, briefly raising Germany's benchmark 10-year yield.

(With inputs from agencies.)