The head of the ECB allowed a reduction in key rates in the summer

Christine Lagarde, President of the European Central Bank (ECB), noted the likelihood of a reduction in key interest rates this summer in her interview with Bloomberg in Davos.

Earlier, some members of the ECB leadership also expressed the expectation of a rate cut in the summer. Christine Lagarde supported this idea and said that such a move would probably be supported by the majority of the members of the ECB governing council.

At the same time, Lagarde stressed that the decision depends on statistical data, and a high level of uncertainty still exists. She noted that by the end of spring, the ECB will have enough data on the dynamics of wages in the eurozone to understand whether inflation is really weakening.

Traders, in general, expect a possible five to six rate cuts of 25 basis points. The first decrease is expected in April. However, Christine Lagarde warned that too high expectations of a rate cut could complicate the fight against inflation.

The head of the Dutch Central bank, Klaas Knoth, also stressed that markets are getting ahead of themselves with forecasts of rate cuts and that much is needed to bring inflation back to the 2% level.