Lagarde Signals Dovish Tone as ECB Ponders Next Move

European Central Bank (ECB) President Christine Lagarde stated that any further interest rate hike by the ECB will depend on future developments. In a speech, she emphasized that the central bank will decide on its next move 'meeting by meeting,' whether to hold, increase, or cut interest rates.

Lagarde's comments were interpreted as a slightly more dovish tone compared to her historic average of 5.7/10, as measured by the FXS Speechtracker score of 4.4/10. However, she noted that growth is 'a bit more promising than we thought,' which tempered expectations for imminent tightening and limited Euro upside.

The absence of clear second-round effects in her speech suggests less pressure to hike aggressively. Economists at Deutsche Bank pointed out that inflation expectations in the ECB's consumer survey were slightly higher in August, indicating a modest firming in household price expectations after recent declines.