ECB rate cut expectations cemented by latest inflation figures

25bps cut priced in

Markets are expecting the European Central Bank to cut interest rates by 25 basis points tomorrow (5 June) on the back of slowing eurozone inflation.

Inflation in the EU fell below the ECB's target of 2% last month, dropping from 2.2% in April to 1.9% in May, according to the European Union's statistics office Eurostat; the first time inflation has dipped below 2% since September 2024. Morningstar's chief equity strategist, Michael Field, said that a cut would provide a boost for equity markets in Europe "at a key juncture", when business and consumer confidence is low and would give the central bank latitude to handle shifts in the economic outlook. China threatens to retaliate after blaming the US for 'discriminatory' trade measu...