The decline in European rates can largely be attributed to developments in the US, where key figures have now started to disappoint after more than a year of consistently positive surprises. Sluggish domestic inflation leads to fewer cuts from the ECB In the eurozone, the ECB continues to signal a clear intention to deliver a rate cut of 25bp at the meeting on 6 June, but what follows remains uncertain.
A slightly later start to interest rate cuts seems well in line with signals from the members of the Federal Open Market Committee , who predominantly signal patience while waiting for clearer indications that inflationary pressures are subsiding. The first faint sign of this was visible in the April CPI release, where the underlying inflation measures saw some softening.