The European Central Bank kept its key rates unchanged following its Governing Council meeting. The deposit rate remains at 4%, the refinancing rate at 4.5% and the marginal lending rate at 4.75%. Many times pre-announced, the decision surprised neither “ECB watchers” (monetary policy specialists) nor financial market professionals.
With a first rate cut on June 6 now widely anticipated, the ECB took the opportunity to specify the three conditions for changing its monetary policy. “If the updated assessment […] inflation outlook, underlying inflation dynamics and the strength of monetary policy transmission were expected to further strengthen [la] confidence in the sustainable convergence of inflation towards the objective, it would be appropriate to reduce the current restrictive nature of monetary policy”, we read in its press release.