The European Central Bank (ECB) is increasingly confident that inflation in the euro zone will fall to its target of 2%, according to statements by its president, Christine Lagarde, made on Monday. Lagarde offered the clearest signal yet that the ECB could cut interest rates at its next policy meeting on October 17, as recent data suggests a weakening in both inflation and economic activity.
Following his remarks, money market investors increased their bets on a reduction in borrowing costs in October, raising the odds of a 25 basis point rate cut, up from a 25 basis point chance. % observed at the beginning of last week.
The Euro fell 0.36% against the dollar, after the comments of the president of the ECB. Source: Yahoo Finance
Expectations for a rate cut in October
During her hearing before the European Parliament in Brussels, Lagarde mentioned: “The latest developments reinforce our confidence that inflation will return to target in a timely manner, suggesting that the ECB will take this into account during its next meeting in October.”
Inflation in the 20 countries that make up the euro zone likely fell below the ECB’s 2% target for the first time since mid-2021, according to the latest national data. Lagarde also suggested that Tuesday’s inflation reading for the euro zone would be below the ECB’s initial projections, further strengthening the possibility of a rate cut.
Economic performance and mixed signals
Weak growth data and the recent slowdown in key economic indicators have raised expectations that the ECB will opt for a rate cut in October. Monetary policy hawks at the ECB are already laying the groundwork to advocate for this measure, following a series of worse-than-expected economic data.
Despite the challenges, Lagarde acknowledged the resilience of the labor market and the ability of companies to absorb some of the wage increases, which has helped moderate inflationary pressures from rapid wage growth. However, he noted that the low levels of some survey indicators suggest that the economic recovery faces certain obstacles.
In summary
The ECB, led by Christine Lagarde, appears to be leaning towards a rate cut at its October meeting, with inflation falling close to the 2% target and economic growth showing signs of weakness.
As money markets prepare for a possible 25 basis point cut, the ECB will need to balance the need to stimulate the economy while controlling inflation pressures in an increasingly uncertain global environment.
Do you want to always be updated in the world of cryptocurrencies? Subscribe now to the CriptoTendencia WhatsApp channel! Here you will instantly receive the most relevant information about Bitcoin, Altcoins, DeFi, NFTs, Blockchain and the Metaverse.
Related
Crypto Keynote USA
For the Latest Crypto News, Follow ©KeynoteUSA on Twitter Or Google News.
