FTSE up 0.47%; DAX up 0.45%; CAC 40 up 0.42% (Il Sole 24 Ore Radiocor) - London, 06 Jun - European shares closed higher after the European Central Bank cut rates by 25 basis points for the first time since 2019 as widely expected by the markets. The ECB also released new forecasts in which it now sees headline inflation averaging 2.5% in 2024, 2.2% in 2025 and 1.9% in 2026. For inflation excluding energy and food, the ECB projects an average of 2.8% in 2024, 2.2% in 2025 and 2.0% in 2026. While economic growth is expected to pick up to 0.9% in 2024, 1.4% in 2025 and 1.6% in 2026.

Despite the rise in inflation forecasts, investors still believe the ECB is likely to cut interest rates in September.

Speaking after the rate cut, ECB president Christine Lagarde emphasized that the bank is now more confident that inflation is falling toward 2% in the medium term.

Traders hope the ECB's move may set the stage for more central banks to follow suit later in the year.

Investors are betting the Federal Reserve will make its first policy pivot in September, providing inflationary pressure shows clear signs of subsiding.

The London FTSE 100 closed up 0.47% at 8,285.34 points, the Frankfurt DAX added 0.45% at 18,654.50 points, the Paris CAC 40 rose 0.42% at 8,040.12 points, while in Milan the FTSE MIB gained 0.95% at 34,834.30 points, and in Madrid the IBEX 35 closed 0.81% higher at 11,444.50 points.

AAA-Zap

(RADIOCOR) 06-06-24 18:06:56 (0627) 5 NNNN