The ECB looks certain to cut its deposit rate from 3.75% to 3.5% next week and policymakers will probably signal that they expect to reduce rates only gradually in the coming quarters. President Lagarde will have to acknowledge that the economy may be slowing again in the third quarter, but that services inflation remains sticky. However, she will also say the Governing Council is increasingly confident that wage inflation will slow in the coming year, allowing core inflation to trend down.
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