The euro slipped after ECB President Christine Lagarde signaled the central bank favors a measured approach to rising inflation rather than an aggressive policy shift. Lagarde said growth remains broad-based and the labor market stays robust, even as the inflation outlook for 2027 and 2028 has moved higher than expected months ago.
EUR/USD dropped 25 pips to 1.1364, hitting session lows after Lagarde's remarks on the inflation path. Lagarde said the shock is too large to look through entirely, but that a measured response is appropriate to keep inflation in check: "We view a 'measured response' as appropriate to keep inflation in check".
Lagarde described euro area growth as broad-based across most countries and sectors, and said she expects that pattern to continue. Manufacturing is performing solidly, and the labor market remains robust, she said. Still, Lagarde called the outlook highly uncertain, noting that major tech advancements have not reduced unemployment and that the verdict is still out.
On prices, Lagarde said the ECB sees higher inflation ahead but no signs it is being embedded. The inflation outlook for 2027 and 2028 is now higher than the ECB projected a few months ago, she said, while the central bank stays on the "middle path" for monetary policy it laid out earlier this year.
Source: investingLive
Trading involves risk.
Risk Disclaimer
