ECB Holds Rate at 4% with Eyes on June 2026 Pivot
The ECB kept its deposit rate at 4.0% in early 2026. Lagarde hints at a potential June pivot, but persistent service inflation remains a key hurdle for a rate cut.
Is your mortgage relief finally coming? The European Central Bank (ECB) just kept interest rates steady, but all eyes are now shifting toward a potential summer pivot in 2026. Despite a cooling economy, persistent service sector inflation is forcing policymakers to stay the course for now.
The ECB Interest Rate Decision June 2026 Outlook
During its first meeting of the year, the ECB opted to leave its deposit rate at a record 4.0%. President Christine Lagarde signaled that while a June cut remains "on the table," it's "not a pre-commitment." According to Reuters, Eurozone inflation currently sits at 2.4%, while the more stubborn core inflation—which excludes volatile energy and food prices—remains at 2.9%.
The Battle Against Service Sector Inflation
The central bank's dilemma lies in the service sector. While energy prices have stabilized, service costs aren't dropping as fast as hoped. ECB officials don't want to cut rates too early, only to see inflation bounce back. They're looking for clear evidence that wage growth is moderating before they pull the trigger on a pivot.
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