The ECB expectedly cut rates by 25bp today, but refrained from giving clear signals about the path ahead. That said, given that the new staff forecasts show inflation returning to target and that even after today’s move, rates remain at restrictive territory, further gradual rate cuts look likely ahead. At the same time, the ECB remains attentive of the remaining upside inflation risks, and is prepared to keep rates at restrictive levels for as long as necessary. Underlying inflation has also eased, reinforcing the signs that price pressures have weakened, and inflation expectations have declined at all horizons. At ... (full story)