ECB summer rate cut looks likely

The ECB is unlikely to reduce interest rates at Thursday’s monthly meeting, but ongoing weak inflation data increases the prospect of a rate cut during the summer.

Inflation across the eurozone has come in well below the ECB’s 2% target for over a year, which has prompted fears that the region could be facing a period of deflation.

ECB president Mario Draghi has said at a number of previous monthly meetings that the central bank is considering all options in fighting the threat of deflation. This prompted speculation that the Frankfurt-based bank might embark on a round of quantitative easing.