Simon Barry: Stage set for ECB rate cuts as inflation heat turns down

If residual concerns about services prices and wage developments dissipate as seems likely, there is plenty of scope for the ECB to take rates down from high levels

In summing up the Governing Council’s March discussion, ECB president Christine Lagarde acknowledged the 'good progress' that has been made in getting inflation down towards target. 

After an unprecedented run of 10 consecutive interest rate hikes, the European Central Bank has left rates on hold since last September. Investors, banks, borrowers, and depositors ae now trying to figure out what’s coming next from Frankfurt.

Bulled up by a plunge in inflation which had seen it drop to 2.4% in November from a record high of 10.6% just 13 months earlier, markets at the turn of last year were priced to expect a first-quarter, point-rate cut in March, and for a further 1.5 percentage points in cuts by the end of the year.