The inflation outlook for 2027 and 2028 is now higher than the ECB's forecasts from a few months ago, although Lagarde said there are no signs that inflation is becoming embedded. She added that wages have not shown a material response to energy shocks and estimated that government energy support for citizens has remained in the 0.1 pp of GDP range.
Tuesday, October 20, 2026
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Traders Cut October ECB Rate Hike Bets to Below 40%
Global Markets23 days ago
European Central Bank President Christine Lagarde's remarks on the neutral interest rate triggered a shift in market expectations for monetary policy in October. Traders reduced the probability of a rate hike to less than 40% after Lagarde told the European Parliament that current rates sit at the upper end of the neutral range and that the bank is not driving policy decisions with reference to that rate, though she advocated for a "measured response" to inflation.
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