European Central Bank policymakers do not expect to change their message on the need for high interest rates before their March meeting, making any rate cut before June difficult, seven people familiar with the matter told Reuters.
The sources said they would need to see how the data pans out between now and, at the earliest, their March 7 meeting before considering the kind of 'dovish' pivot that the U.S. Federal Reserve performed this week by opening the door to future rate cuts.
Weighing a rate cut before June, when most of the crucial wage data for next year will have been published, would be difficult, those people said.
This is at least two months later than the market is currently anticipating - in a disconnect that has preoccupied policymakers at this week's Governing Council meeting, the sources said.
Some explained that divergence could be boiled down to diverging views on inflation. While investors expect the recent, marked fall in inflation to continue, most central bankers thought it would prove temporary.
One source said a cut may be possible even before June if inflation kept coming in lower than expected.
Yet two others said the ECB should push back more forcefully against traders' view or risk seeing the central bank's tightening efforts, which have seen it raise rates 10 straight times in 1-1/2 years, be undone by the market.
A spokesperson for the ECB declined to comment for this article. Lagarde said on Thursday the central bank would be "data-dependent" rather than "time-dependent", a view that other policymakers endorsed.
Public commentary from ECB governors on Friday also suggested they were in no rush to cut rates.
Bundesbank President Joachim Nagel said it was "too early to sound the all-clear" on inflation while his Austrian colleague Robert Holzmann dismissed a journalist's question about the timing of a rate cut as a "nice try".
Banque de France's governor Francois Villeroy de Galhau did at least say that the next ECB move would be to reduce borrowing costs but also insisted the central bank would stay at the "plateau" for rates for a while and "enjoy the view".
Money markets are pricing in a 50% chance of a first, 25-basis-point rate cut in March, followed by successive reductions at every meeting through December.
This would leave the rate the ECB pays on bank deposits at 2.5% by the end of next year, down from 4.0% now .
