Euro area data today affords the ECB more flexibility

Inflation pressures are moderating and the euro area economy is performing better than anticipated in Q1. That’s the kind of recipe the ECB can work with, when you extrapolate the findings from the data today.

A rate cut in June is all but a given but the ECB has been adamant to mention that it doesn’t mean that one will also come in July. Should the euro area economy have faltered in Q1, it would have put added pressure on the ECB to cut sooner rather than later. But alas, that is not the case – at least for now.

As such, the ECB is being afforded more flexibility in making their next policy steps. And that is something that Lagarde & co. can definitely be happy about.