• Disinflation is well on track.
  • Rates are at the upper end of the neutral range.
  • A trade war in the long term is a negative supply shock.
  • The impact of a trade war on the long term is unlikely inflationary.
  • Risk is that we move to a supply/demand situation like in 2022, which means we have to be vigilant on inflation.
  • At meeting next week the ECB will not yet have new projections.

The market is certain of a 25 bps rate cut at the upcoming meeting and sees at least two more rate cuts by the end of the year.

ECB's Knot
ECB's Knot
Source: Forex Live