European Central Bank: Communication focus as French spreads widen – Nordea

Nordea’s Jan von Gerich expects the ECB to keep rates unchanged at the October Governing Council meeting, with the next 25bp hike still likely in December. He highlights the sharp widening in French government bond spreads and tighter financing conditions, noting that higher French yields affect a large part of the Euro area and could influence the ECB’s policy tone and timing.

ECB holds as markets eye December

"The ECB is set to leave rates unchanged next week, with the next hike still likely in December."

"Anything other than unchanged rates at the Governing Council meeting concluding on 29 October would be a surprise."

"We stick to our baseline of 25bp hikes in December and March 2027, which would take the deposit rate to 3.00%."

"A further significant tightening in financing conditions could leave the ECB on hold for a longer period of time, but such conclusions would be premature at this point."

"However, a clearly disorderly market reaction, spreading well beyond France, could derail a December hike."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)