ECB’s Lagarde: We are not pre-committing to a particular rate path

  • Expects euro area economy to continue to recover in the coming quarters
  • That follows the growth in Q1, after five quarters of “stagnation”
  • Services sector is expanding, manufacturing is showing signs of stabilisation
  • Price pressures are gradually diminishing
  • However, wages are still rising at an elevated pace
  • But forward-looking indicators signal that wage growth will moderate during the year
  • Inflation expected to fluctuate around current levels for this year
  • Inflation to only decline towards target in 2H 2025
  • Risks to growth are balanced in the near-term but are skewed towards the downside in the medium-term

The remarks so far are a bit of a snoozer. It is mainly detailing the economic situation and their viewpoint in making the decision today. Let’s see if she makes mention of anything else about the next few months. Otherwise, all we might get is just the headline remark. While that and higher inflation projections might seem hawkish at the balance, I still think September is very much on the table for the next cut barring any upside surprises to price data.

This article was written by Justin Low at www.forexlive.com. Source