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ECB's Nagel pours cold water on the prospects of a near-term cut following January's HICP headline undershot to 1.7% Y/Y in his speech today titled "Under what circumstances is the inflation rate too low?". Key highlights below:

• "Extending the projections from December 2025 using technical assumptions about oil prices, exchange rates, and market interest rates largely confirms the inflation outlook. Even the recent appreciation of the euro against the US dollar is unlikely to significantly change this assessment."
• "Overall, the possibility of inflation falling below the 2 percent mark in the coming quarters is quantitatively small and is mainly attributable to volatile energy prices. At the same time, price stability is ensured in the medium term and long-term inflation expectations are anchored."
• "We will act if the medium-term projection for the inflation rate deviates significantly and persistently from our 2% target. However, small, temporary deviations – especially in volatile components such as energy prices – do not require a change of course if inflation expectations are anchored."
• "In my view, there are many factors that suggest that the current interest rate level is appropriate. First, the shortfall is short-term and small, and in the medium term inflation is on track to reach our 2% target. Second, long-term inflation expectations are firmly anchored. Third, the development of core inflation also suggests that we will achieve price stability in the medium term. And fourth, monetary policy transmission is proceeding as expected."

The NY Fed's January Survey of Consumer Expectations (SCE) showed largely steady findings from recent months, if anything showing a stabilization in already-weak labor market sentiment with a further pullback in near-term inflation expectations. Judging from the survey, consumers' 1-year inflation fears have faded, but concerns over the labor market have not.

• The inflation expectations gauges showed a drop in 1Y to 3.09% (3.42% prior) vs analysts' expectation of a steady figure (unrounded),  and a 6-month low. 3Y (2.98%) and 5Y (3.00%) were essentially unchanged; 3Y has basically been at this level since the end of 2024 with the exception of a jump to 3.17% in April 2025 (tariff "Liberation Day").
• This is a relatively important survey for FOMC members who hold it in higher regard than various alternative inflation surveys, but most are consistent with diminishing near-term consumer inflation concerns (including UMIch's Feb drop to a 13-month low in 1Y expectations; Conference Board remains an outlier to the upside through January).  
• The longer-term gauges are relatively consistent with previous periods in which actual PCE/CPI was at target but overall the inflation gauges are on the higher side of the overall historical series.
• On the labor market front, there was mixed news: "Mean probability that U.S. unemployment rate will be higher one year from now" ticked very slightly up from December (41.9% from 41.8%), which is below the late-2025 and Mar/Apr 2025 highs (again, tariff uncertainty-related) but still very elevated on a historic basis.
• And the mean perceived probability of finding a job within 3 months ticked up to 45.67% from December's all-time low 43.1%. But like other consumer survey indicators such as the Conference Board's labor differential, this remains consistent with a continued rise in the unemployment rate over time. 

• EUR/USD: Feb11 $1.1820-30(E1.2bln), $1.2000(E1.8bln); Feb12 $1.1750(E1.3bln); Feb13 $1.1800(E2.7bln), $1.1850(E2.5bln), $1.1950(E2.1bln)
• USD/JPY: Feb11 Y156.45-60($2.2bln); Feb13 Y155.00($1.2bln), Y156.00($1.2bln), Y158.50($1.6bln), Y159.00($2.0bln), Y160.00($3.1bln)
• AUD/USD: Feb13 $0.6800(A$1.6bln)
• USD/CNY: Feb12 Cny6.9000($1.1bln); Feb13 Cny6.9700($1.2bln)