LONDON (Reuters) -The European Central Bank kept interest rates unchanged on Thursday, but signalled that it may be preparing to ease policy as inflation eases.

It has left rates at a record high since September as both inflation and the economy weaken, with markets anticipating a rate cut in June even as the U.S. Federal Reserve looks set to delay its own policy easing to later in the year.

ECB President Christine Lagarde said the ECB was not dependent on the Fed and would not speculate on what other central banks might do.

MARKET REACTION:

FOREX: The euro initially fell to a two-month low but received a lift as the dollar softened following U.S. data. It was last trading at $1.0741, compared to $1.0731 just before the ECB statement. It was broadly unchanged on the day.

BONDS: Government bond yields across the euro area fell slightly. Germany’s 10-year bond yield was last up 0.5 basis points on the day at 2.433%.

Money markets priced around a 70% chance of 25 bps June rate cut, compared to a roughly 80% chance earlier on Thursday.

STOCKS: Europe’s STOXX 600 index erased its losses and was last little changed on the day.

COMMENTS:

SAMUEL ZIEF, HEAD OF GLOBAL FX STRATEGY, J.P. MORGAN PRIVATE BANK, LONDON:

“The ECB has been guiding towards a first cut in June and we see no reason to bet against that after today.”

“While inflation prints in the U.S. are possibly giving the Fed some reason for pause, the ECB is actually gaining confidence in its inflation outlook. So long as the data between now and the June meeting – namely wage growth – come in as expected, the bar looks fairly high for the ECB not to cut.”

SOREN RADDE, HEAD OF EUROPEAN ECONOMIC RESEARCH, POINT72, LONDON:

“The Governing Council added that based on incoming data and its ‘upcoming assessment’, there could be a potential easing of policy restrictions.”

“We read the ‘upcoming assessment’ as a reference to the updated staff forecast at the June meeting implying a strong signal that the Council’s baseline expectation is a rate cut at that meeting.”

KIT JUCKES, CHIEF FX STRATEGIST, SOCIETE GENERALE, LONDON:

“Clearly the U.S. CPI data has pushed the currency (euro) down, shifted U.S. rate probabilities round a fair bit, but the market hasn’t really backed off from a June rate cut for the European Central Bank.”

“Had they come out hyper dovish in the statement we might have seen euro-dollar trading below 1.07 and making headway towards 1.05, but not from what we have so far.”

COLIN ASHER, SENIOR ECONOMIST, MIZUHO BANK, LONDON:

“The policy statement is very much as expected. Cuts are coming (should the economy evolve as the ECB expects) – just not quite yet.”

“It’s a bit of a surprise to see the Swiss franc take the news of potential ECB rate cuts so well, especially as the cuts have been widely telegraphed.”

MARK WALL, CHIEF EUROPEAN ECONOMIST, DEUTSCHE BANK RESEARCH, LONDON:

“The ECB is growing steadily more optimistic that the conditions for policy easing are falling into place. No one should be surprised by a rate cut in June.”

“The question is whether the ECB’s ongoing caution on domestic inflation means back-to-back cuts in June and July are less likely?”

“Dialling back restrictiveness, to use President Lagarde’s wording, might be more gradual.”

ARNE PETIMEZAS, SENIOR ANALYST, AFS GROUP, AMSTERDAM:

“The ECB tees up a June cut as expected, but it could have used stronger language and there is wiggle room for the ECB to hold.”

“The statement suggests that the ECB will plot its own course independent of the Fed. In reality, the ECB will keep a close eye on the Fed. If the Fed doesn’t cut this year, that limits the scope for ECB cuts to perhaps two.”

JACK ALLEN-REYNOLDS, DEPUTY CHIEF EUROZONE ECONOMIST, CAPITAL ECONOMICS, LONDON:

“The ECB’s decision to update its guidance suggests that an interest rate cut at the next meeting in June is very likely.”

“We think that the conditions will be in place for the Bank to bring the deposit rate down to 3% by the end of the year and further next year.”

MARCHEL ALEXANDROVICH, EUROPEAN ECONOMIST, SALTMARSH ECONOMICS, LONDON:

“My sense is that they are prepping markets for a 25 bps move in June but it is a less definitive signal than they have made in the past.”

“Markets are focused on what happens beyond that. We’ll see if we get a sense that we will get consecutive moves or June then September. They will try not to commit.”

HUSSAIN MEHDI, DIRECTOR OF INVESTMENT STRATEGY, HSBC ASSET MANAGEMENT, LONDON:

“For a while now, the ECB has essentially pre-committed to a June cut. There is a high bar for this not to be delivered. But there is a wide range of possible outcomes in the subsequent months, depending on further progress with disinflation. So far, the data is moving in the doves’ favour.”

“Nevertheless, the increasing likelihood of a prolonged Fed pause poses some problems for policymakers in Frankfurt—and elsewhere for that matter. A growing policy divergence could reignite currency volatility and cause FX-driven inflation pressures. In this scenario, the ECB may move more gradually than markets currently anticipate.”

(Reporting by Markets Team; Compiled by Samuel Indyk; Editing By Dhara Ranasinghe and Hugh Lawson)