(Bloomberg) -- There’s still time for investors to bet on steeper yield curves as the European Central Bank’s first interest-rate cut gets closer, according to rates strategists at Societe Generale SA.

ECB President Christine Lagarde caught markets off-guard on Thursday, when she failed to push back on the extent of easing priced by markets for this year. Traders rushed to price in a quicker start to cuts, triggering a sharper fall in shorter-dated rates which are more sensitive to monetary policy than longer ones — a so-called steepening of the curve. 

It’s a trade that repeatedly caught investors out last year, as sticky inflation pushed the central bank to hike for longer than many had anticipated. However, Societe Generale strategists including Adam Kurpiel say the shift in Lagarde’s stance — despite some push-back from colleagues on Friday — is a green light.

“While the precise timing of rate cuts and their subsequent number remain uncertain, rate cuts are coming,” they wrote in a note. “The most direct implication is a broad steepening of the EUR curve.”

Lagarde’s Talk of Summer ECB Cut Sees Traders Bet on April

They point out that the curve between two and 10-years steepened on average by 140 basis points during the last three cycles, compared to 60 basis points or so from the most inverted level in the current cycle seen last June.

“While curve steepening most often starts before rate cuts, like this time, the bulk of the move occurs after rate cuts have started,” the strategists wrote. “From that standpoint, it is still not too late to initiate steepeners.”

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