European Central Bank signals rate cut ahead

• That inflation progress — and signs of a weakening economy — means policymakers in Europe might be able to slash rates sooner than those across the Atlantic, helping to kick off a global rate-cutting cycle in major economies.

What they're saying: If price hikes continue to slow and give policymakers' confidence that inflation is closing in on its 2% target, "then it would be appropriate to reduce the current level of monetary policy restriction," the ECB said in a statement.

• Put plainly, further progress on inflation would make the ECB more comfortable to cut rates. It's the first time since the post-pandemic inflation shock that such a prospect has been raised by the ECB in its statement.
• The central bank held interest rates at 4% on Thursday.

The big picture: The statement notes positive developments on inflation, which was 2.4% in the year through March, down from 2.6% the prior month.

• Core inflation, which excludes food and energy prices, was 2.9% — the lowest since 2022.
• The ECB noted inflation progress in its statement: "Most measures of underlying inflation are easing, wage growth is gradually moderating, and firms are absorbing part of the rise in labour costs in their profits."

Yes, but: The ECB also warned that the battle against inflation isn't totally won, noting that "domestic price pressures are strong and are keeping services price inflation high."