FX.co ★ Euro Holds Near $1.14 as ECB Cuts Rates and Lowers Inflation Outlook

The euro reduced its earlier momentum but continued to hover near the $1.14 mark following the European Central Bank's anticipated decision to cut interest rates and adjust its inflation forecast downward. According to the ECB, headline inflation is projected to average 2.0% in 2025, 1.6% in 2026, and 2.0% in 2027. These figures for 2025 and 2026 reflect a downward revision of 0.3 percentage points from March, primarily driven by assumptions of lower energy prices and a stronger euro. Core inflation, which excludes energy and food, is expected to average 2.4% in 2025 and 1.9% across both 2026 and 2027, remaining largely consistent with earlier estimates. Regarding economic growth, the ECB anticipates real GDP to increase by 0.9% in 2025, 1.1% in 2026, and 1.3% in 2027. Policymakers highlighted the alignment of inflation with the sustainable convergence toward the 2% medium-term target, supported by slowing wage growth and corporate profits that mitigate cost pressures. The central bank reaffirmed its dedication to a data-driven, incremental approach in determining future monetary policy.