STIR: ECB Speakers Continue To Express Caution Over Inflation Risks

EUR STIR markets are little changed vs. Monday’s closing levels.

• ECB-dated OIS shows 39bps of cuts through the remainder of ’24, and a ~70% implied probability of a 25bp rate cut through September.
• Euribor futures are -0.5 to +2.5 through the blues.
• Several rounds of ECB-speak have been seen since the opening of the Bank’s annual Sintra forum.
• ECB President Lagarde stressed the need for caution in assessing inflation risks and noted that “data dependence does not mean data point dependence”.
• Elsewhere, ECB Chief Economist Lane also noted that the June data will not answer the ECB’s questions on services inflation (which looks set to print above 4.0% Y/Y again).
• This comes ahead of the Eurozone flash June inflation print (1000BST today).
• Following the Dutch data this morning, region-wide headline HICP tracks in-line with consensus at 2.5% Y/Y.
• ECB’s Wunsch, Simkus and Kazaks have noted that current market expectations for one or two more rate cuts in 2024 were reasonable (Kazaks had previously said as much).
• The Sintra programme can be found here.