ECB inflation forecasts were mostly unchanged in today’s update.
- 2025 HICP seen at 2.1% vs. 2% prior
- 2026 at 1.7% vs. 1.6% prior
- 2027 at 1.9% vs. 2.0% prior
For the relevant period, that’s all essentially meeting the mandate. The market may see that lower 2027 number as paving the way for another cut, though market pricing through year end is still at 40%, which is the same as before the decision.
The market also doesn’t appear to be impressed by the 2025 GDP growth forecast at 1.2% vs. 0.9% prior.
- 2026 at 1.0% vs. 1.1% prior;
- 2027 at 1.3% vs. 1.3% prior
The euro move so far is about 15 pips to the downside, which is largely inconsequential. We will wait for Lagarde’s press conference.
