ECB sources: 50 bps at the next meeting and then 25 bps afterwards?

Policymakers are mulling a slower pace of hikes than previously, according to an 'ECB sources' report that says the idea of a slower move in March is 'gaining support'.

EUR/USD has ticked lower on this and equities have picked up.

Lagarde at the most-recent ECB meeting surprised the market with her hawkish stance, indicating a series of 50 bps hike coming.

Looks like she might be walking that back in short order.

What I fear is that many policymakers are seeing lower inflation Inflation Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Inflation is defined as a quantitative measure of the rate in which the average price level of goods and services in an economy or country increases over a period of time. It is the rise in the general level of prices where a given currency effectively buys less than it did in prior periods.In terms of assessing the strength or currencies, and by extension foreign exchange, inflation or measures of it are extremely influential. Inflation stems from the overall creation of money. This money is m Read this Term now but it's just a function of energy markets. For Europe, that's been due to good weather and good weather has a way of not lasting forever.

European stocks are running on this and Italian 10-year yields have dropped.