The European Central Bank kept interest rates at record highs on Thursday (Apr 11) but sent an even clearer signal that it may be preparing to cut them as eurozone inflation continues to fall.

At her press conference, ECB President Christine Lagarde said that “just a few” members of the Governing Council believed it was already time to loosen policy but had agreed to rally to the consensus to wait.

She said the bank would have more information and issue new inflation and growth projections in June.

She acknowledged the relevance of developments in the US economy to its policy-setting, but also stressed that conditions in the eurozone were different.

“We are data-dependent, not Fed-dependent,” she said.

The central bank for the 20 countries that share the euro currency kept its deposit rate at 4.0 per cent, where it has been since September as part of a 1½ year effort to rein in prices.

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But, with inflation now close to the ECB’s 2 per cent target, bank lending at a standstill and the economy barely growing, the ECB dropped fresh hints about a possible cut at its next meeting.

“If the Governing Council’s updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission were to further increase its confidence that inflation is converging to the target in a sustained manner, it would be appropriate to reduce the current level of monetary policy restriction,” the ECB said.

ECB policymakers, including those who typically favour higher rates, have been lining up behind a rate reduction at their June 6 meeting, provided key indicators including wage growth and underlying inflation continue to moderate.

But that decision may now be complicated by uncertainty whether the Federal Reserve will be able to cut its own rates in June as US inflation stays stubbornly above its goal.

With Thursday’s decision, the ECB also left the interest rate on its daily and weekly loans for banks at 4.75 per cent and 4.50 per cent respectively.

Banks have barely tapped these auctions for years, as they still have plenty of cash from last decade’s money-printing programmes. REUTERS