🕤ECB chair, Christine Lagarde press conference starts. EURUSD loses 📉

After ECB hold both interest and deposit rates unchanged at 4.5 and 4% respectively, chair Christine Lagarde starts press conference. 

ECB Lagarde

• The key ECB rates are now on restrictive levels and the bank hold it as long as it will be necessary
• Decisions are based on data, policy transmission and inflation outlook
• Eurozone economy is likely to have stagnated in Q4, but data shows that it can improve in 2024 
• Some surveys also point to growth further ahead, however data signal weakness in the near term
• Growth may be higher as real wages support the demand in the economy
• The demand for labor is slowing, but the labor market is still robust
• Higher wages may be inflationary
• Future oil and gas prices as well as shortages may hit the eurozone, especially if global growth will slow
• It's still premature to talk about rate cuts
• Shipping costs are increasing
• Inflation rebound in December was weaker than expected (economic slowdown, negatively for euro)
• Inflation will probably fall later in 2024
• Rate cut in the summer is still possible

As for 2 PM GMT, there are no very hawkish comments from Lagarde and EURUSD loses almost 0.2%. Markets expect at least 1 rate cut, before the June 2024.

• Lagarde reaffirms that 2% inflation target is still a priority
• Slight decline in negotiating wages is favorable for ECB but this still an increase 
• The bank doesn't expect second wave of inflation (profit unit will probably come down, and it's actually happening)
• The consensus says that it is too early to cut interest rates.
• ECB sees some stabilization in terms of wages 
• The wage growth trajectory is good for inflation
• Christine Lagarde hopes for a decline in inflation and stable wage growth, which will allow for economic recovery
• Last PMI data from eurozone were quite positive for the economy, signalizing stabilization
• Lagarde also told that fiscal policy will be observed closely, signalling that ECB will have to react if eurozone member countries withdraw a fiscal support for energy prices
• Disinflation should be stronger to support ECB policy change
• ECB chair hopes that real wages growth and lowering price pressures will end in economic expansion after a period of slowdown

The market is already pricing in more cuts this year than before the meeting. EURUSD is around 1.0860 levels now.

Source: xStation5