Critical inflation expectations remain anchored at 2%

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European Central Bank (ECB) President Christine Lagarde stated on Friday that critical inflation expectations remain anchored at 2%. She emphasized the importance of these expectations and expressed confidence that inflation numbers would look different by the end of the current year.

During an interview with Bloomberg TV, Lagarde mentioned that they would closely monitor wage developments. When asked about changing the inflation target, she argued that it would be misleading and counterproductive to anchoring inflation expectations.

Regarding the economy, Lagarde stated that German growth is not broken and is demonstrating resilience.

Market reaction

EUR/USD remains in consolidation around 1.0800, largely flat for the day, following speeches by ECB’s Lagarde and Fed’s Powell at Jackson Hole. On a weekly basis, the pair is heading towards its sixth consecutive weekly decline.