- ECB officials, notably Gediminas Šimkus and Madis Müller, are cautious about immediate rate cuts, suggesting a potential move in the summer.
- Federal Reserve member Christopher Waller’s recent comments hint at a more measured approach to rate cuts, stating there’s no urgency, adding uncertainty to the EUR/USD path.
Several ECB officials are expressing opposition to rate cuts, potentially helping to curb losses in the EUR/USD, which is currently testing the 61.8% Fibonacci level after a more than 0.7% drop.
Davos has prompted ECB officials to share their views on the Euro Area’s prospects and their positions on the likelihood of interest rate cuts in 2024.
ECB Board Member Gediminas Šimkus, also Chairman of the Lithuanian Central Bank, suggests holding off on a central bank move, but sees the possibility of a cut in the summer. Similarly, ECB Board Member Madis Müller, the Governor of the Central Bank of Estonia, believes expectations for a rate cut are ahead of the current data reality.
However, the future direction of EUR/USD remains uncertain, as Fed officials are pushing back against interest rate hikes too, and their influence in the markets may be more significant.
Federal Reserve member Christopher Waller, whose November comments raised expectations of Fed rate cuts, today (not at Davos) expressed a more cautious outlook on the pace of rate cuts (“I see no reason to move as quickly or cut as rapidly as in the past”).
Monitoring other Fed members’ addresses this week will be crucial:
Wednesday, Jan 17
- 09:00: Fed’s Bowman Speech
- 09:00: Fed’s Barr Speech
- 15:00: Fed’s Williams Speech
Thursday, Jan 18
- 07:30: Fed’s Bostic Speech
Friday, Jan 19
- 16:15: Fed’s Daly Speech
