European stocks close higher after ECB inflation estimate, rate decision

Thursday’s closing European market gains came following the European Central Bank’s revised inflation estimate, which restarted the 2024 surge. The pan-European Stoxx 600 broke above the crucial 500 threshold for the first time during the session, and it ended the day 1.05% higher at 503.45 points.

The European Central Bank reduced its projection for inflation in 2024 from 2.7% to 2.3% while maintaining interest rates at a record 4%. The ECB also stated that this year’s 0.6% growth rate for the Eurozone would be lower than anticipated.

The revised macro estimates were interpreted by the markets, who had already priced in rate cuts starting in June, as more evidence for that month. Meanwhile, market pricing “seems to be converging better” with the ECB’s perspective, according to ECB President Christine Lagarde.

The announcement on Thursday essentially confirms that the bank will begin loosening policy at its June meeting—that is, if inflation and wages don’t spike in the interim. With today’s news, swap markets have now nearly fully priced this in.

A significant hint concerning the timing of the European Central Bank’s rate drop may soon be released to the markets. In other news, Asian stocks increased following remarks made on Wednesday by U.S. Federal Reserve Chair Jerome Powell. He restated his position that the central bank was not yet prepared, even though it might begin lowering interest rates. As investors processed the outlook for monetary policy, US stocks increased in morning trading as well.