Lagarde Expects ECB to Further Cut Interest Rates

Forex - ECB President Christine Lagarde stated that the risks regarding the inflation outlook are now "two-sided," which may lead the European Central Bank to further lower interest rates.

Speaking to reporters in Vilnius, Lagarde mentioned that the trend is clearly "downward" and that the recent move is "not the last rate cut to be made."

Lagarde added, "What we see now is a change in risk position. Until now, our inflation forecast was associated with upside risk—meaning we believed inflation could be higher than our forecasts—but now we believe the risks are two-sided, rather than being balanced."

Analysts foresee consecutive reductions in borrowing costs until the deposit rate reaches 2%. Investors are pricing in the possibility of a larger move that officials have not overlooked either.