ECB Can Wait to Hike Rates as Bond Selloff Tightens Conditions
Dow Jones
Yesterday
1024 GMT - Eurozone inflation beat expectations in September but this likely won't be enough to sway the European Central Bank into raising rates just yet, Ebury's Matthew Ryan says in a note. A hike in December remains in the cards, however. Policymakers are becoming increasingly vocal that higher yields should limit the need for central bank hikes, he says. The selloff in bonds acts to tighten financial conditions by pushing up mortgage rates and corporate borrowing costs. "[ECB President Christine] Lagarde said as much last week, arguing that the notable rise in long-term rates since the September meeting will slow growth and ease the pass-through of energy costs to inflation," Ryan says. Investors rank about an 80% chance of an ECB hike in December, LSEG data shows.
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