E.C.B. Holds Rates Steady as Markets Look for Hints on First Cut

The European Central Bank held interest rates steady on Thursday, keeping the deposit rate at 4 percent, the highest in central bank’s history.

It was the fifth consecutive decision to leave rates untouched as inflation closes in on the central bank’s 2 percent target. Last month, inflation in the eurozone slowed to 2.4 percent. But officials added that if data on inflation and the effect of past rate increases gave them more confidence that inflation was on a sustainably low path, they would start pulling back their restrictive policy stance.

Central bankers have been trying to work out the delicate timing of when to loosen their rate policy. They don’t want to keep rates higher longer than necessary, which could hurt the economies of the eurozone, but at the same time, they don’t want to ease too early and revive price pressures. Considerable progress has been made in bringing inflation down from its double-digit highs in late 2022, but returning inflation all the way to the 2 percent target is expected to be a bumpy process.

Policymakers, wanting to be sure that price growth stays low, have focused on core inflation, which better reflects domestic price pressures because it excludes volatile energy and food prices that are heavily influenced by global prices. In March, core inflation slowed more than economists expected, to 2.9 percent.