ECB Pauses Again But Warns On Inflation

The second straight pause keeps the ECB's benchmark deposit rate at 4%

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The European Central Bank froze borrowing costs again on Thursday but warned that inflation could pick up again in the near term, in an apparent pushback against market hopes of early rate cuts in 2024.

The second consecutive pause keeps the ECB's benchmark deposit rate at a record high of 4% following a historic streak of hikes to tame runaway prices.

The Frankfurt institution said rates were at levels that if "maintained for a sufficiently long duration" would make a "substantial contribution" to bringing inflation back down to the 2% target.

Eurozone inflation slowed faster than expected in November to a two-year low of 2.4%, after peaking at around 10% last year.

But the ECB cautioned against declaring victory too soon.

"While inflation has dropped in recent months, it is likely to pick up again temporarily in the near term," it said, amid concerns about rising wages in the 20-nation currency club.