Next week’s ECB meeting is set to see few, if any, new policy signals, given the limited
new information that has been released since the December meeting. We expect
President Lagarde to confirm that the next policy rate change is most likely a cut, which
may happen in summer. It remains to be seen whether the June meeting will be singled
out as the key meeting to watch, similar to Lane’s comments this weekend. We expect
Lagarde to repeat the three key criteria for setting the policy rates, which should point
to the new staff projections in March as key.
Markets are pricing the first ECB policy rate cut for April, and a total of 135bp through
to the end of 2024. The policy rates are priced to trough at 2% in two years’ time.