Policymakers are poised to reduce eurozone borrowing costs by a quarter percentage point on Thursday, taking the key deposit rate to 3.75 percent from its current record level.ECB officials have widely flagged the coming cut and brushed off concerns about a divergence from the US Federal Reserve, where a robust economy has pushed back expectations of when rate reductions will start.
The eurozone economy also grew faster than expected in the first quarter as it emerged from recession, although it is still slow compared to the robust growth of the US economy.After the inflation setback, Capital Economics' Jack Allen-Reynolds said another reduction at the ECB's meeting in July was now 'unlikely.
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