The European Central Bank president said policymakers will know a little more in April, and “we will know a lot more in June”.
Speaking after policymakers left the deposit rate at 4 per cent for a fourth straight meeting, Lagarde said there’s a definite slowdown in consumer prices but that she and her colleagues aren’t “sufficiently confident” at present to commence monetary easing.
The updated inflation projections will underpin investor expectations that a first rate cut will arrive in June. Markets are now pricing a full percentage point of ECB easing in 2024, while economists reckon there’ll be three cuts. February inflation, at 2.6 per cent, came in a touch stronger than expected – supporting those who don’t want to rush into lowering rates. A Nowcast compiled by Bloomberg Economics, however, shows March inflation at 2 per cent – suggesting the ECB is closer to its target than it may think.Whatever the reality, most policymakers are keen to examine the drip feed of wage data due over the coming months before acting.