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ECB cuts but caution abound

• The ECB cut its main policy rates by 25bps as expected.
• The ECB’s updated forecasts revealed a 0.2ppt increase in the 2024 and 2025 inflation forecasts to 2.5% and 2.2%.
• The ECB will follow a meeting-by-meeting approach and stressed it was not pre-committing to a particular rate path.
• The EUR rates curve shifts higher by about 5bps providing modest EUR FX support but the US jobs report will be key to further moves higher.