European stocks, including the FTSE 100, edged higher on Thursday as traders awaited the European Central Bank’s (ECB) decision on interest rates. The ECB is expected to cut rates by 0.25%, marking the eighth reduction in just over a year.
This move aims to support the eurozone economy amid ongoing trade tensions caused by US policies.
Eurozone inflation fell to 1.9% last month, below the ECB’s 2% target for the first time since September. This decline strengthens expectations of a rate cut. Ronald Temple, chief market strategist at Lazard Asset Management, said markets see nearly a 100% chance of the cut.
He added that rates might fall further to 1.5% by year-end due to the US’s tougher trade stance against the EU. Currently, the ECB considers a neutral rate range between 1.75% and 2.25%.
Investors are also focused on the ECB’s updated economic forecasts, which will be revealed at a press conference later today. London’s FTSE 100 index traded near flat early in the session.
Germany’s DAX and France’s CAC 40 each rose by 0.2%, while the pan-European STOXX 600 gained 0.2%. US futures for the S&P 500, Dow, and Nasdaq pointed to a positive open. The British pound strengthened slightly against the US dollar, trading at 1.3564.
The ECB meeting is scheduled for this afternoon, where investors hope to gain clarity on future monetary policy and economic growth projections.
The bank may also signal a pause on rate cuts over the summer before reassessing in September. Additionally, ECB President Christine Lagarde is expected to discuss the euro’s growing global role amid a weakening dollar.
