IEI - Rates Spark: Lagarde Clear About Not Committing To Cuts
2024-07-19 04:20:00 ET
Summary
- The ECB decided to keep rates on hold as expected, and markets received little forward guidance.
- We see a continuation of the global macro trend for steeper curves, driven by the prospect of future cuts.
- We saw something similar for the Gilt curve on the back of cooling labour market data.
By Benjamin Schroeder , Michiel Tukker , Padhraic Garvey, CFA
ECB makes no commitment to a September cut
The ECB meeting ended with markets showing little reaction - the Governing Council unanimously decided to keep rates on hold. Very front-end rates with a view to September - if anything - nudged up slightly toward 20bp of easing priced for that month’s meeting and more towards 46bp for the year as a whole. The key sentence in the press conference was that the decision in September was “wide open”. While the market is already very much tilted to a cut, it got no further affirmation of that view out of Thursday's meeting. The ECB maintains a data-dependent and meeting-by-meeting approach and has not provided any forward guidance....
Rates Spark: Lagarde Clear About Not Committing To Cuts