ECB President Christine Lagardes Upcoming Speech May Reveal ECBs Monetary Policy

ECB President Christine Lagarde's Upcoming Speech May Reveal ECB's Monetary Policy 

European Central Bank President Christine Lagarde will make her hotly anticipated speech today at 18:30 GMT. As such, market players and analysts shall analyze her speech carefully to obtain more clues regarding the direction of the ECB's monetary policy. Lagarde's rhetoric may essentially lean on inflation, employment, and growth projections. Attention will be more on hints that might suggest a change in direction for interest rates or changing asset purchases. If the tone were tighter means such as rate hikes would indicate the euro should benefit in the short term. Easing policies -rate cuts or asset purchases would expand and may put downward pressure on the currency.

It is still not clear what concrete advice Lagarde will give in her speech, but it is undoubtedly going to be a market sentiment and decision-shaping event across all financial sectors. Investors can get a bit nervous, and volatility in both forex and bond markets becomes likely.

Some positive or less-than-positive words from Lagarde may reinforce expectations concerning the ECB's ability to combat inflationary forces at a reasonable cost and secure economic stability. That, of course, remains to be seen in how she finally states her case and aligns it with the overall economic outlook.