ECB holds to measured path as Lagarde cools bets on bigger rate move
What's new: Traders cut year-end hike bets to 33 basis points from 37, while Germany's 2-year yield fell 6 basis points.
The European Central Bank does not need a stronger response to the Middle East war's economic fallout because inflation is still on track to return to its 2% goal over time, ECB President Christine Lagarde told lawmakers in Brussels on Monday. She said there was no evidence of longer-term inflation expectations becoming unmoored or of wage-price spillovers that would justify a more forceful move now. Markets trimmed expectations for additional tightening after her remarks, pricing 33 basis points of hikes by year-end versus 37 earlier. Germany's 2-year bond yield fell 6 basis points to 2.59%. Lagarde said the ECB remained between its baseline and mild economic scenarios and would stay agile as the shock evolved.