The European Central Bank held borrowing costs steady Thursday, giving policymakers more time to assess progress on inflation after last month's first interest rate cut in five years. The pause was widely expected after ECB president Christine Lagarde said policymakers would need time to gather sufficient data before deciding the next move. The ECB is also hoping to see a slowdown in wage growth, which has been elevated as eurozone workers seek salary increases to compensate for higher living costs. "Stickiness in services prices, fast wage growth and a resilient labour market" all argued "against back-to-back rate reductions", said Unicredit's Valli. But recent data suggested the recovery "has lost steam" in the second quarter, said ING economist Carsten Brzeski, potentially strengthening the case for another rate cut to bolster economic activity.

Source: Daily Nation July 18, 2024 12:50 UTC