We heard from Lagarde last week in the ECB press conference so we’re not breaking any new ground here. The market is pricing in just a 20% chance of a cut this year at any point.
- We expect inflation to stabilize at our 2% medium term target
- Our data dependent approach serves us well in the current environment
It’s tough to get excited about ECB policy right now or what is happening in the Eurozone economy but maybe that’s the point. It’s a low-drama economy right now and that’s what a big part of the market is looking for. European stock markets are up 2-4% so far this year and the euro is up 1.3% against the dollar.
You don’t have to lay awake at night worrying about the leader blowing up a trade deal or threatening to invade someone. Moreover, the valuations are much lower than the US tech scene, which is another source of unwanted volatility.
