ECB keeps policy rate at record 4
Projections show lower growth and inflation this year
Lagarde says we will know a lot more in June

FRANKFURT, March 7 Reuters The European Central Bank kept borrowing costs at record highs on Thursday while cautiously laying the ground to lower them later this year, saying it had made good progress in bringing down inflation.

Having underestimated a sudden surge in prices two years ago, the central bank for the 20 countries sharing the euro has been reluctant to declare victory over what turned out to be the most brutal bout of inflation in decades.

But with new forecasts pointing to lower inflation and growth, ECB policymakers on Thursday indicated they were preparing for a first cut in interest rates, probably in June, provided incoming data, especially on wages, confirms the trend.

We did not discuss cuts for this meeting, but we are just beginning to discuss the dialling back of our restrictive stance, ECB President Christine Lagarde told a press conference.

Lagarde hinted strongly that was more likely to happen at the ECB39;s June 6 meeting, as wage data for the first quarter will then have been published. Sources have been telling Reuters similar for months. The ECB has another policy meeting before then, on April 11.

We will know a little more in April, but we will know a lot more in June, Lagarde said.

She noted that inflation, including nearly all underlying measures, has been falling towards the ECB39;s 2 target…