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ECB sources: 50 bps at the next meeting and then 25 bps afterwards?

Policymakers are mulling a slower pace of hikes than previously, according to an ‘ECB sources’ report that says the idea of a slower move in March is ‘gaining support’.

EUR/USD has ticked lower on this and equities have picked up.

Lagarde at the most-recent ECB meeting surprised the market with her hawkish stance, indicating a series of 50 bps hike coming.

Looks like she might be walking that back in short order.

What I fear is that many policymakers are seeing lower inflation now but it’s just a function of energy markets. For Europe, that’s been due to good weather and good weather has a way of not lasting forever.

European stocks are running on this and Italian 10-year yields have dropped.

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