Were Lagarde’s remarks on rate hikes easy to interpret?

This week’s data and statements seem varied and relatively difficult to interpret, making the path for rate hikes more uncertain. Most analysts tend to believe that the ECB will halt in July, but do expect the Fed in the United States to deliver two more rate hikes before Q4, with one possibly as early as June.

While speaking at the Hearing before the Committee on Economic and Monetary Affairs of the European Parliament in Brussels, ECB’s President Christine Lagarde reiterated that price pressures remain strong in the Eurozone.

“Underlying inflationary pressures remain high”, Lagarde said adding that “No clear evidence that underlying inflation has peaked.”

She also stressed that wage pressures have strengthened further and decisions will continue to be based on policymakers’ assessment of the inflation outlook in the light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission, noting that “Our rate hikes are being transmitted forcefully to financing conditions.”

Lagarde reiterated that “Full effects of our monetary policy measures are starting to materialize and effects of monetary policy tightening on real activity and inflation can be expected to strengthen in the coming years.”

The EUR/USD pair showed no immediate reaction to Lagarde’s comments and was last seen losing 0.3% on the day at 1.0680.