European Central Bank (ECB) chief Christine Lagarde yesterday insisted that talk of interest rate cuts was ‘premature’ even as storm clouds gathered over Germany, its largest economy.
The ECB left rates on hold at 4 per cent and did little to substantiate expectations that it will cut rates five times this year.
Lagarde admitted the eurozone was ‘likely to have stagnated’ in the final quarter of last year.
In a further setback, a German business survey flagged up recession fears, while in the UK a poll by data firm GfK pointed to a recovery in consumer confidence to its highest level in two years.
The ECB increased interest rates to a record-high 4 per cent as it sought to bring down inflation but ended hikes in September.
Cautious: European Central Bank chief Christine Lagarde admitted the eurozone was ‘likely to have stagnated’ in the final quarter of last year
Inflation is now 2.9 per cent – still above the 2 per cent target – and the bank has been reluctant to signal that it will soon be ready to start easing.
Lagarde said: ‘The consensus was that it was premature to discuss rate cuts. We need to be further along the disinflation process to be confident that inflation will be at target – sustainably so.’
Expectations of an April rate cut strengthened as analysts detected a slight softening in ECB language.
Bank of England Governor Andrew Bailey faces fervid expectations over its quarterly monetary policy report next week.
The ECB sees signs of a recovery for Europe over the longer term but it is still struggling.
Yesterday, figures from Germany’s Ifo institute showed business morale falling. Ifo president Clemens Fuest said: ‘The German economy is stuck in recession.’
Michael Hewson, chief market strategist at CMC Markets, said: ‘Germany is in an absolute hole with no prospect of getting out of it.
‘The ECB seem more worried about inflation than a depression.’
#fiveDealsWidget .dealItemTitle#mobile {display:none} #fiveDealsWidget {display:block; float:left; clear:both; max-width:636px; margin:0; padding:0; line-height:120%; font-size:12px} #fiveDealsWidget div, #fiveDealsWidget a {margin:0; padding:0; line-height:120%; text-decoration: none; font-family:Arial, Helvetica ,sans-serif} #fiveDealsWidget .widgetTitleBox {display:block; float:left; width:100%; background-color:#af1e1e; } #fiveDealsWidget .widgetTitle {color:#fff; text-transform: uppercase; font-size:18px; font-weight:bold; margin:6px 10px 4px 10px; } #fiveDealsWidget a.dealItem {float:left; display:block; width:124px; margin-right:4px; margin-top:5px; background-color: #e3e3e3; min-height:200px;} #fiveDealsWidget a.dealItem#last {margin-right:0} #fiveDealsWidget .dealItemTitle {display:block; margin:10px 5px; color:#000; font-weight:bold} #fiveDealsWidget .dealItemImage, #fiveDealsWidget .dealItemImage img {float:left; display:block; margin:0; padding:0} #fiveDealsWidget .dealItemImage {border:1px solid #ccc} #fiveDealsWidget .dealItemImage img {width:100%; height:auto} #fiveDealsWidget .dealItemdesc {float:left; display:block; color:#004db3; font-weight:bold; margin:5px;} #fiveDealsWidget .dealItemRate {float:left; display:block; color:#000; margin:5px} #fiveDealsWidget .dealFooter {display:block; float:left; width:100%; margin-top:5px; background-color:#e3e3e3 } #fiveDealsWidget .footerText {font-size:10px; margin:10px 10px 10px 10px;} @media (max-width: 635px) { #fiveDealsWidget a.dealItem {width:19%; margin-right:1%} #fiveDealsWidget a.dealItem#last {width:20%} } @media (max-width: 560px) { #fiveDealsWidget #desktop {display:none;} #fiveDealsWidget #mobile {display:block!important} #fiveDealsWidget a.dealItem {background-color: #fff; height:auto; min-height:auto} #fiveDealsWidget a.dealItem {border-bottom:1px solid #ececec; margin-bottom:5px; padding-bottom:10px} #fiveDealsWidget a.dealItem#last {border-bottom:0px solid #ececec; margin-bottom:5px; padding-bottom:0px} #fiveDealsWidget a.dealItem, #fiveDealsWidget a.dealItem#last {width:100%} #fiveDealsWidget .dealItemContent, #fiveDealsWidget .dealItemImage {float:left; display:inline-block} #fiveDealsWidget .dealItemImage {width:35%; margin-right:1%} #fiveDealsWidget .dealItemContent {width:63%} #fiveDealsWidget .dealItemTitle {margin: 0px 5px 5px; font-size:16px} #fiveDealsWidget .dealItemContent .dealItemdesc, #fiveDealsWidget .dealItemContent .dealItemRate {clear:both} }
This post first appeared on Dailymail.co.uk
