The European Central Bank is expected to freeze interest rates again this week, with officials wary of starting to cut them before seeing more evidence that the recent drop in inflation will be sustainable.
After the ECB launched an unprecedented campaign of monetary tightening to tame skyrocketing consumer prices, eurozone inflation has slowed steadily from a peak of more than 10% in late 2022.
According to preliminary data, it eased to 2.6% in February, down from 2.8% in January and not far from the ECB's two percent target.
At the same time, the outlook is bleak, with the eurozone narrowly avoiding a technical recession in the second half of 2023, weighed down by the poor performance of its largest economy, Germany.
While slowing inflation and a worsening economy should bolster the case for rate cuts, inflation's downward path is bumpy and officials remain concerned about completing the "last mile" to the central bank's target.
The Frankfurt-based ECB Governing Council is expected to keep the key deposit rate at a record four percent for a fourth straight meeting on Thursday. /BGNES
