Europe | ECB pauses, shifts to watchful waiting

Summary

Lagarde cooled expectations of another rate cut this year, reinforcing a more cautious, data-dependent stance. If the global outlook holds steady and no surprises arise in inflation or activity, the ECB may have already reached the end of its easing cycle.

Key points

• Key points:
• ECB keeps interest rates unchanged, as widely expected, after seven consecutive cuts
• Relatively hawkish on macro, highlighting solid Q1 growth and tariff-related inflation risks, while downplaying the expected 2026 inflation undershoot
• Well positioned to wait and see; now markets see a lower probability of a further cut this year

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