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ECB gives strong signal of June rate cut

• The ECB left its monetary policy stance unchanged, as expected.
• However, the guidance in the statement was altered with the ECB citing factors that would further increase confidence in achieving the inflation goal and lead to a rate cut.
• The “sufficiently long duration” needed to keep rates unchanged was also dropped suggesting a rate cut in June is a high possibility.
• President Lagarde repeats that the ECB does not target FX levels – we see increasing scope for further EUR/USD declines.