ECB President Lagarde (Q&A) says ECB has projected undershooting of inflation in 2026 for a long time; in December, our forecasts moved back on track; medium-term, inflation is seen at 2% in 2027 and 2028

• Services inflation is declining a bit now
• ECB will have more data in March
• There is nothing that changes the baseline
• Reiterates will look at several data points, not one

Lagarde's comments suggest a cautious approach from the ECB regarding inflation forecasts, indicating that while there is a long-term expectation for inflation to return to 2% by 2027-2028, current trends may not be strong enough to alter the baseline outlook significantly. Lower services inflation could reflect easing price pressures, but the ECB’s reliance on multiple data points before making decisions implies they remain vigilant about adjusting policy. The implications for bond markets could be a confirmation of a stable environment for rates, while the euro may take cues from broader risk sentiment in the wake of these comments.