Lagarde speech: Rates will be kept sufficiently restrictive for as long as necessary

Eren Sengezer FXStreet

While testifying before the European Parliament's Committee on Economic and Monetary Affairs on Monday, European Central Bank (ECB) President Christine Lagarde said that they expect the economic recovery in the Eurozone to strengthen over time.

Key takeaways

"Looking ahead, the suppressed level of some survey indicators suggests that the recovery is facing headwinds."

"The labour market remains resilient."

"Employment growth slowed to just 0.2% in the second quarter, and recent indicators point to a further deceleration in the coming quarters."

"Looking ahead, inflation might temporarily increase in the fourth quarter."

"The latest developments strengthen our confidence that inflation will return to target in a timely manner."

"We will take that into account in our next monetary policy meeting in October."

"Policy rates will be kept sufficiently restrictive for as long as necessary to achieve our aim."

"The new data available at the time of the September Governing Council meeting reinforced our confidence in the timely return of inflation to our 2% target."

Market reaction

EUR/USD came under modest bearish pressure with the immediate reaction to these comments and was last seen trading near 1.1170, where it was virtually unchanged on the day.

Author

Eren Sengezer

FXStreet

As an economist at heart, Eren Sengezer specializes in the assessment of the short-term and long-term impacts of macroeconomic data, central bank policies and political developments on financial assets.

GBP/USD declines as market caution lifts US Dollar

GBP/USD extends its gains for the second successive day, trading around 1.3200 during the Asian hours on Wednesday. The currency pair depreciated as the US Dollar gained momentum, driven by a combination of robust domestic economic data and a complex, mixed geopolitical landscape.

EUR/USD weakens below 1.1400 as Fed hike bets lift US Dollar

The EUR/USD pair trades on a negative note near 1.1380 during the early Asian trading hours on Wednesday. The major pair extends the decline as traders continue to assess the developments surrounding the US-Iran peace deal.

Gold retains bearish bias near two-week low as Fed hike bets support USD

Gold recovers slightly from a fresh two-week low, near $4,080 touched during the Asian session on Wednesday, though it lacks follow-through. The US Dollar stands firm near its highest level since May 2025 amid firming expectations of a Fed rate hike, which, in turn, is seen undermining the non-yielding bullion. Furthermore, mixed US-Iran signals over Tehran's nuclear issues favor the USD bulls, suggesting that the path of least resistance for the commodity remains to the downside.

Australia CPI set to show inflation accelerated again in May

The Australian Bureau of Statistics will publish the high-impact Consumer Price Index for May on Wednesday at 01:30 GMT. Heading into the inflation test, the Australian Dollar is at its lowest level in two months against the US Dollar, having surrendered the 0.7000 psychological mark.

"Rearranging the deckchairs on the Titanic": UK's fiscal crisis outlasts another Prime Minister

Keir Starmer's resignation as the UK Prime Minister comes ten years after the Brexit referendum vote, a coincidence that financial markets have been quick to note. The British Pound trades around 1.3220 against the US Dollar on Thursday.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.