ECB Takes Summer Pause to Preserve Monetary Policy Flexibility

While the decision for a new 25bp cut in the ECB's deposit rate was widely anticipated, the notably more hawkish tone of President Lagarde's speech surprised the markets. The persistent uncertainties surrounding trade relations between the United States and the eurozone seem to have justified this desire to maintain the " optionality " of monetary policy, which, according to Lagarde, is now "well positioned." However, last week was not particularly reassuring in terms of macroeconomic indicators, especially for the PMI indices of the United States, the eurozone, and China, as well as for European inflation, which fell below 2% last May.