Share markets enjoyed a fourth straight day of gains on Thursday as the prospect of another ECB rate cut pinned shorter-term euro zone borrowing costs near to their lowest level since the end of 2022, and the euro to a 4-month nadir.
An overnight rally in supersized US tech stocks and a rebound in commodity markets was also helping the mood, but focus was rapidly gravitating towards what message ECB chief Christine Lagarde sends from Frankfurt later.
The central banks second quarter-point rate cut of the cycle is almost certain, but how hard and fast it moves for the rest of the year still seems up in the air and this meeting will throw new ECB staff forecasts into the mix.
Chief European Economist at BNP Paribas Paul Hollingsworth said new inflation projections might actually come in higher than the last set in June, although they will have been finalised before this months dive in oil prices.
We think that this will translate into a message of gradualism, he said, adding that even if Lagarde does not completely rule out a follow-up cut in October, it does not look likely for now.
