In a recent interview at Davos, European Central Bank (ECB) President Christine Lagarde indirectly suggested that the ECB may cut interest rates in the coming months. Responding to the comments made by several governing council members regarding a potential rate cut by or during the summer, Lagarde acknowledged their views while maintaining caution.

Lagarde emphasized that although she also believes a rate cut is likely, the ECB remains data dependent and uncertain about certain indicators that have yet to stabilize. It is worth noting that Lagarde and ECB chief economist Philip Lane have both stated that key wage data will not be available until later this spring.

Despite this, market expectations already anticipate an interest rate cut by April, with some even predicting two cuts by June. Currently, the euro is valued at $1.0898, experiencing a 1% decline this year. The yield on the 2-year German bund rose by 3 basis points to 2.64%.

It is clear that investors will be closely monitoring the ECB's decisions and future announcements regarding interest rates as the year unfolds.

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