European Central Bank leaves rates unchanged as world's central banks wrestle with when to cut

FRANKFURT, Germany — The European Central Bank left its key interest rate benchmark unchanged Thursday, choosing to wait for confirmation that rapidly receding inflation is firmly under control before cutting rates to support an economy that’s struggling to grow.

The policy meeting at the bank’s skyscraper headquarters in Frankfurt is widely regarded as a prelude to a likely rate cut at the next meeting on June 6, after Lagarde dropped a broad hint by saying that the bank would have more information on the path of inflation at that meeting. It’s a policy shift closely watched by stock investors, after markets soared in recent months on expectations of lower rates by this summer. Broad stock market indexes fell immediately in the U.S. on Wednesday and bond prices rose after a hotter than expected inflation report raised fears that the Fed may wait longer than previously thought to lower its benchmark interest rate.

The ECB is teeing up a cut even as uncertainty grows over the prospect of a first rate cut from the U.S. Federal Reserve. U.S. annual inflation of 3.5% in March and robust U.S. jobs figures suggesting strong growth have led to questions about whether the Fed will carry through with the three rate cuts that it had signaled for this year. Analysts now think the U.S. cuts could be fewer or could come later than originally expected.

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