- BoE says its in no rush to raise rates
- ECB expected to cut rates next month
- German and French inflation released
FTSE 100: -0.14%
CAC 40: -0.16%
FTSE MIB: -0.38%
IBEX 35: -0.30%
Stoxx 600: -0.23%
European stocks slumped as the Bank of England (BoE) reiterated that it was in no rush to raise interest rates despite pressure to address fears of a housing bubble.
The BoE said it would keep interest rates unchanged for the time being, leaving it on track to raise rates in around a year's time.
The central bank forecast growth of 3.4% this year, unchanged from February.
However, the Bank expects unemployment will fall faster than previously forecast to 5.9% in two years compared to 6.4% in February's estimate.
"Although the margin of spare capacity has probably narrowed a little since then, the MPC continues to judge that there remains scope to make greater inroads into slack before raising Bank Rate," the BoE said.
"As set out in its February guidance, when the Committee does start to raise Bank Rate, it expects to do so only gradually and to a level materially below its pre-crisis average."
ECB to introduce new policy measures
The European Central Bank (ECB) is expected to cut rates and introduce measures to boost lending to small and medium-sized firms next month to address weak inflation and high unemployment in the Eurozone.
Interest rate cuts will include the ECB's deposit rate going negative for the first time, sources told Reuters.
ECB board member Peter Praet confirmed to German newspaper Die Zeit that the central bank was preparing a range of measures.
"We could offer more long-term loans to banks, possibly against conditions," he said. "We could cut interest rates once again. A combination of measures is also thinkable.
"Negative interest rates are a possible part of such a combination of measures. In the context of the very low inflation rate in the euro area an appreciation is a problem, because a stronger euro cheapens imports and further depresses the inflation rate."
Meanwhile, reports today showed a slight improvement in annual inflation in Europe's two biggest nations.
German consumer prices on an annual European harmonised basis rose by 1.1% in April following a 0.9% increase a month earlier, in line with expectations.
French inflation increased by 0.8% last month, compared to a 0.7% climb in March, missing estimates of 0.9%.
Another report showed European industrial production fell by 0.1% year-on-year in March following a 1.7% increase the prior month, trailing the 0.9% gain forecast by economists.
Mediaset SpA slumped after the Italian broadcaster controlled by former Prime Minister Silvio Berlusconi reported a first-quarter loss.
Banco Comercial Portugues retreated following a report that said the lender is planning a capital increase.
Compass Group advanced after the catering firm said it will return £1bn to investors.
Nordex SE gained after the German wind-turbine maker raised its full-year forecasts.
The euro rose 0.06% to $1.3712.
Brent crude futures increased $0.328 to $109.600 per barrel, according to the ICE.