The European Central Bank is widely expected to announce a reduction in interest rates at its meeting in Frankfurt on Thursday, despiteMoney markets have fully priced in a 25 basis point move lower at the June gathering, and any other outcome would be a shock.
Investors will be monitoring the language used in the Governing Council's statement and the tone struck by ECB President Christine Lagarde in her press conference at 2:45 p.m. Frankfurt time. "My intuition is that they will pull the trigger and decrease rates by point 25 percent, even if there has been some bad news... as regards the goal, which is to stabilize prices and having inflation going down," Trichet said.in headline inflation, core inflation and services inflation, and negotiated wages picking up in the first quarter of the year.
"We must accept that data could month-on-month or quarter-to-quarter so we must be prudent... based on current data, instead of thinking would decrease twice after June, it is more reasonable to think of one decrease of rates," Trichet said.
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