Bankinter | Lagarde in Jackson Hole. The main messages from the ECB President were: (i) Growth and inflation. She was optimistic about a ‘soft landing’ for the economy thanks to the strength of the labour market and the relaxation of monetary policy conditions. On inflation, she noted that upward pressures still exist, although she expects it to remain anchored close to its inflation target, mainly due to wage moderation in the coming months. (ii) The importance of preserving the independence of central banks, stating that political interference can render monetary policy ‘dysfunctional and generate instability’. And (iii) the impact of immigration on the labour market. He pointed out that immigration has been one of the main drivers of the labour market in Europe, stating that in the last three years immigration has contributed to 50% of labour market growth.
Analysis team’s opinion: This message provides no new information or visibility on the roadmap for future monetary policy moves. Therefore, we maintain our central scenario that, at most, the ECB could cut rates once more in 2025 to close the year at 1.85%/2.00% (Deposit/Lending) and thus end the cycle of rate cuts.
