Nothing in Lagarde's comms to suggest future rate cuts, EUR to be “well supported” throughout 2026

Matthew Ryan, CFA Ebury

Today’s ECB meeting came and went without so much as a blip - just what Lagarde and co. would have been hoping for. Monetary policy remains in a “good place”, and the ECB has shown absolutely no appetite for further cuts any time soon.

Downside risks to growth have eased, particularly following the signing of the US-EU trade deal and the abating of the risks associated with the US-China trade war. Euro Area inflation is also consistent with the 2% target and appears set to hover around this level, despite the disinflationary implications of a strong euro and easing wage pressures.

We see nothing in Lagarde’s press conference that would suggest to us that further cuts are on the way. This could change next year should fiscal stimulus in Germany fail to provide the desired boost to growth, and/or the tariffs weigh more heavily on the economy than expected.

Yet, the bar for additional cuts is now extraordinarily high, and that should act to keep the euro well supported throughout 2026.

Author

Matthew Ryan, CFA

Ebury

Matthew is Global Head of Market Strategy at FX specialist Ebury, where he has been part of the strategy team since 2014. He provides fundamental FX analysis for a wide range of G10 and emerging market currencies.

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