European Central Bank cuts interest rates for the first time since 2019, leaving Fed behind

• The big exception is the Fed, which has pushed back expectations of a rate cut. U.S. inflation looks stubbornly stuck above the Fed's 2% target, despite an otherwise healthy economy.
• Euro zone inflation, meanwhile, has dropped notably alongside weaker economic conditions.

What they're saying: ECB officials said that, based on a more favorable inflation outlook, "it is now appropriate to moderate the degree of monetary policy restriction after nine months of holding rates steady."

State of play: The ECB cut interest rates by a quarter-percentage point, after the Bank of Canada that made a similar move on Wednesday.

• Rates in the eurozone now stand slightly below record-high levels — keeping pressure on the economy.
• It's far too soon to tell whether this marks the beginning of a rate cutting cycle that returns to the rock-bottom levels seen in the previous decade.

What to watch: The ECB added that it "will keep policy rates sufficiently restrictive for as long as necessary" to get inflation back down to its 2% target.

• New projections from ECB staff show inflation will average 2.5% this year and 2.2% in 2025—both higher than previously thought in March.

The big picture: Global monetary policymakers make rate decision based on what's happening in their respective economies.

• But there are worldwide spillovers from such decisions (e.g., currency moves) that make them more cautious about diverging too much from other major central banks, like the Fed.
• ECB President Christine Lagarde has said in recent months that officials there are "data dependent, not Fed dependent."