The conference with Christine Lagarde, the ECB president, has just begun. The theme of the speech is monetary policy in the Eurozone. Here are the most important comments made by Lagarde:
- This is not the time to declare victory
- Eurozone activity has stagnated in recent quarters and is likely to remain weak for the rest of the year
- We expect inflationary pressures to weaken further
- We need to look carefully at the various forces affecting inflation and focus firmly on our mandate to maintain price stability
- The medium-term inflation outlook remains subject to considerable uncertainty
- There are some signs that employment growth may lose momentum toward the end of the year
- Wage pressures, meanwhile, remain strong
- Core inflation may rise again in the coming months
Overall, Lagarde's statement confirms earlier assumptions made by individual ECB bankers. The baseline scenario remains keeping rates unchanged, and unless any rebound in price pressures in the coming months surprises bankers with its dynamics, indications from money markets suggest that the first rate cut could take place as early as April 2024.
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