ECB Holds Rates at Record Highs, Signals Upcoming Cut

FILE PHOTO: The building of the European Central Bank (ECB) is seen amid a fog in Frankfurt, Germany December 15, 2022. REUTERS/Wolfgang Rattay/File Photo
FILE PHOTO: The building of the European Central Bank (ECB) is seen amid a fog in Frankfurt, Germany December 15, 2022. REUTERS/Wolfgang Rattay/File Photo
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ECB Holds Rates at Record Highs, Signals Upcoming Cut

FILE PHOTO: The building of the European Central Bank (ECB) is seen amid a fog in Frankfurt, Germany December 15, 2022. REUTERS/Wolfgang Rattay/File Photo
FILE PHOTO: The building of the European Central Bank (ECB) is seen amid a fog in Frankfurt, Germany December 15, 2022. REUTERS/Wolfgang Rattay/File Photo

The European Central Bank kept interest rates at record highs on Thursday but sent an even clearer signal that it may be preparing to cut them as euro zone inflation continues to fall.

The central bank for the 20 countries that share the euro currency kept its deposit rate at 4.0%, where it has been since September as part of a 1-1/2-year effort to rein in prices.

But, with inflation now close to the ECB's 2% target, bank lending at a standstill and the economy barely growing, the ECB dropped fresh hints about a possible cut at its next meeting.

"If the Governing Council’s updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission were to further increase its confidence that inflation is converging to the target in a sustained manner, it would be appropriate to reduce the current level of monetary policy restriction," the ECB said, Reuters reported.

ECB policymakers, including those who typically favour higher rates, have been lining up behind a rate reduction at their June 6 meeting, provided key indicators including wage growth and underlying inflation continue to moderate.

But that decision may now be complicated by uncertaintywhether the Federal Reserve will be able cut its own rates in June as US inflation stays stubbornly above its goal.

ECB President Christine Lagarde is likely to be asked about the central bank's plans for June and the possibility of a further cut in July at her regular news conference at 1245 GMT.

With Thursday's decision, the ECB also left the interest rate on its daily and weekly loans for banks at 4.75% and 4.50% respectively.

Banks have barely tapped these auctions for years as they still have plenty of cash from last decade's money-printing programs.



Honda, Nissan and Mitsubishi Drop Talks on Business Integration

This combination of pictures created on February 13, 2025 shows the logo of Honda Motor (L) taken on February 6, 2025 at the company's showroom in Tokyo and the logo of Nissan Motor (R) being displayed at the company's showroom in Tokyo on February 13, 2025. (Photo by Kazuhiro NOGI / AFP)
This combination of pictures created on February 13, 2025 shows the logo of Honda Motor (L) taken on February 6, 2025 at the company's showroom in Tokyo and the logo of Nissan Motor (R) being displayed at the company's showroom in Tokyo on February 13, 2025. (Photo by Kazuhiro NOGI / AFP)
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Honda, Nissan and Mitsubishi Drop Talks on Business Integration

This combination of pictures created on February 13, 2025 shows the logo of Honda Motor (L) taken on February 6, 2025 at the company's showroom in Tokyo and the logo of Nissan Motor (R) being displayed at the company's showroom in Tokyo on February 13, 2025. (Photo by Kazuhiro NOGI / AFP)
This combination of pictures created on February 13, 2025 shows the logo of Honda Motor (L) taken on February 6, 2025 at the company's showroom in Tokyo and the logo of Nissan Motor (R) being displayed at the company's showroom in Tokyo on February 13, 2025. (Photo by Kazuhiro NOGI / AFP)

Japanese automakers Honda, Nissan and Mitsubishi said Thursday they are ending talks on business integration.
Nissan Chief Executive Makoto Uchida said the talks had changed focus from setting up a joint holding company to making Nissan into a subsidiary of Honda, The Associated Press reported.
“The intent was to join forces to win in the global competition, but this was not going to realize Nissan's potential, so I could not accept it,” he told reporters. He said that Nissan was going to aim for a turnaround without Honda instead.
Honda Chief Executive Toshihiro Mibe said in a separate news conference that Honda had suggested a stock swap to speed up decision-making.
“I am really disappointed,” Mibe told reporters. “I felt the potential was great, but I also knew actions that would bring pain were necessary to realize that."
The automakers agreed to end their agreement regarding the consideration of the structure for a collaboration, a joint statement said.
Honda Motor Co. and Nissan Motor Corp. announced in December that they were going to hold talks to set up a joint holding company. Mitsubishi Motors Corp. had said it was considering joining that group.
From the start, the effort had analysts puzzled as to the advantages to any of the companies, as their model lineups and strengths overlap in an industry shaken by the arrival of powerful newcomers like Tesla and BYD, as well as the move to electrification.
Honda and Nissan initially said they were trying to finalize an agreement by June and set up the holding company by August.
The three automakers will continue to work together on electric vehicles and smart cars, such as autonomous driving, they said Thursday.
In recent weeks, Japanese media had various reports about the talks breaking down, citing unidentified sources. Some said Nissan balked at becoming a minor player in the partnership with Honda.
Mibe denied he knew or heard anything about the media speculation that Taiwan's Foxconn was considering taking a stake in Nissan.
Honda is in far better financial shape and was to take the lead in the joint executive team. Honda reported Thursday that its April-December 2024 profits declined 7% to 805 billion yen ($5 billion).
Nissan reported a loss for the July-September quarter as its vehicle sales sank, prompting it to slash 9,000 jobs. At that time, Uchida took a 50% pay cut to take responsibility for the results.