ECB's Lagarde: Risks to economic growth are more balanced

The killer quote is this, when asked if the easing cycle is over, she pivoted to say, "The disinflationary process is over." A definitive statement that slams the door on the idea of imminent rate cuts.

I am not fully buying Lagarde's statement this time. I think she is hiding so much info from the market. The market will fish it out anyway.

This is a pivot in tone. The ECB is moving from a defensive posture (fighting inflation) to a more neutral stance (balancing growth and stability). Markets will likely read this as a dovish tilt, potentially strengthening the euro in the short run, while also tempering expectations of further rate hikes.

This is the hawkish part

ECB's Lagarde: Risks to economic growth are more balanced.

Subtly more hawkish than neutral hold headline suggests. Upward revision of 2025 growth forecast from 0.9% to 1.2%; directly contradicts narrative of slowly Eurozone. Slightly lowered 2026 growth forecast, however N/T signal bullish. Lagarde tone one of confidence, not fear:

• Upgraded growth outlook; labour market strong, resilience of domestic demand cited in both manufacturing & services.
• Risks to economic growth now more balanced; ECB former position was tilted to downside, now more hawkish.
• Downplaying headwinds; risks acknowledged (tariffs, stronger euro etc) - expected to fade next year however.
• Goldilocks inflation control, signals that ECB strategy is work as intended.
• Repeated phrase that the ECB is "in a good place".
• When asked if the easing cycle is over, she pivoted to say "The disinflationary process is over."
• Dismissal of stability risks: "Euro area sovereign bond markets are orderly and are functioning smoothly with good liquidity."
• Divergence from Fed now solidified, long EUR/USD thesis conviction amplified.

There are so many dramatic movements going on in the market today... It's becoming difficult to keep a cool head.

EURUSD is likely going to head for more bullish today...

XAU-USD

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