It was toward the end of an interview European Central Bank President Christine Lagarde gave in Davos, a clear sign she wasn’t setting out to deliver this message. And she said it in a roundabout way.
But, Lagarde appeared to cement expectations that the ECB will cut interest rates this summer, in an interview with Bloomberg News on Wednesday. She was responding to a comment that a majority of governing council members have been saying there will be a rate cut by the summer if not in the summer.
“You’ve talked to some of them, and they have spoken recently, and each of them has a view which I respect completely,” she said. “It’s their job to say, ‘well, it’s likely.’ I would say it’s likely too, but I have to be reserved, because we also are saying that we are data dependent, and then there is still a level of uncertainty, and some indicators that are not anchored at the level where we would like to see them,” she said.
Lagarde, like ECB chief economist Philip Lane, has said that key wage data won’t be available until late in the spring.
Lagarde is still trailing market expectations, which are pricing in a cut by April and in fact two cuts by June.
The euro
EURUSD,
was fetching $1.0898, and it’s down about 1% this year. The yield on the 2-year German bund
BX:TMBMKDE-02Y
rose 3 basis points to 2.64%.
