Financial markets are jonesing for interest rate cuts. Not so fast, says the European Central Bank

By DAVID McHUGH
AP Business Writer

FRANKFURT, Germany (AP) — The European Central Bank has kept its key interest rate unchanged at a record high. ECB President Christine Lagarde said Thursday that inflation needs to fall more before the central bank can be confident enough to cut rates. Stock markets are soaring on hopes that the ECB and the U.S. Federal Reserve will be cutting borrowing costs soon. But Lagarde says bank officials need to ensure inflation is firmly under control first. That’s the reason the ECB raised its benchmark rate to a record 4% in the first place. Markets have predicted a cut as early as April, while Lagarde said she stood behind a comment she made last week about a likely cut this summer.