European Central Bank Executive Board member Piero Cipollone stated that no current signs of stagflation are visible in the euro area, while acknowledging that inflation remains elevated. ECB projections forecast headline inflation at 3.0% for 2026, declining to 2.3% in 2027. This stance follows recent policy rate hikes aimed at curbing persistent inflationary pressures. Market participants interpret these comments as supportive of maintaining current rates, reducing the likelihood of imminent Fed rate cuts. The odds of the Federal Reserve implementing a Pause-Cut-Pause strategy in upcoming meetings remain low at just 1%.
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