Lagarde opening statement: Economic activity has been somewhat weaker than expected

• The disinflationary process is well on track
• Manufacturing has continued to contract
• Services activity showed an uptick in August but latest data is more sluggish
• Business are increasing investment slowly
• Housing investment continues to fall
• Savings rate is well above the pre-pandemic period (about 3 percentage points)
• Labor market remains resilient
• We expect the economy to strengthen over time
• Exports should contribute to the recovery
• Wage pressures in the eurozone remain strong
• Inflation is expected to rise in the coming months, in part due to energy base effects
• Inflation should then decline to target in 2025
• Risks to growth tilted to the downside
• We are not pre-commiting to a particular rate path

The euro is down on the day but that’s more of a result of a strong US dollar than anything in the ECB decision or this statement so far. The market is fully pricing in another 25 bps from the ECB in December.

This article was written by Adam Button at www.forexlive.com.