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Rate hike expectations for the European Central Bank's September meeting are in focus after ECB President Christine Lagarde said the bank anticipates inflation to remain "well above target" until the first half of 2027.
Energy prices are central to the bank's deliberations. The September ECB policy meeting is the next confirmable milestone for anyone positioned on the rate trade.
The Lagarde signal The phrase "well above target" from Lagarde is specific. The ECB is not expecting inflation to return to acceptable levels before the first half of 2027.
That is the reference point the rate market is working off. Energy prices are the cited driver. The ECB is mulling the impact of the spike, and Lagarde's remarks leave the question unresolved.
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