ECB’s de Guindos: Concerns about high inflation have shifted to economic growth

• We will have new projections in December
• But developments point to growth remaining fragile
• Geopolitical risks are increasing
• Potential changes in US trade policy will only add to the uncertainty
• When one imposes tariffs, they have to be prepared for retaliation – which can start a vicious cycle

At the balance, the emphasis on a “fragile” economy and added downside risks to the economic outlook reaffirms another rate cut in December. For now, markets are pricing in roughly ~56% odds of a 25 bps move with the remainder tied to a 50 bps move.

This article was written by Justin Low at www.forexlive.com.