Business · Economy · 57 mins ago
ECB and Fed officials signal possible December interest rate rises
Officials at the ECB and the US Federal Reserve are signaling possible rate rises in December as they try to bring inflation down.
ECB policymaker Joachim Nagel said there were strong reasons to raise rates next month, while Fed governor Christopher Waller said a larger increase may be needed in the United States.
The ECB is expected to raise its deposit rate by a quarter-point to 2.75%, which would be its third increase since the conflict in the Middle East began.
Markets expect the Fed to raise rates by a quarter-point, but Waller has called for a 50-point increase, which would be its biggest rise since 2022.
Officials are weighing the fall in oil prices against uncertainty about the war with Iran, while inflation remains above their targets.
Both central banks will make their next decisions in December, using economic conditions and new forecasts to guide them.
Officials from the European Central Bank and the US Federal Reserve have signalled that they may raise interest rates at their December meetings.
They say inflation remains too high and further monetary tightening may be needed.
Markets expect the ECB to raise its deposit rate by a quarter of a percentage point to 2.75%.
Markets also expect a 25-basis-point Fed increase, while some Fed officials have raised the possibility of a 50-basis-point rise.
Fed Governor Christopher Waller said a larger increase should be considered if underlying inflation remains elevated.
- Who
- Officials from the European Central Bank and the US Federal Reserve, including Joachim Nagel, Christopher Waller and Lorie Logan.
- What
- They have signalled possible interest rate increases in December. Some Fed officials have advocated a 50-basis-point rise.
- When
- At the banks’ December meetings. The Fed meeting is scheduled for 8 and 9 December.
- Where
- The ECB and the Fed are considering the decisions. Waller made his remarks at a Bank of England conference in London.
- Why
- Officials say inflation remains too high and further rate increases may be needed to contain it.
This story does not have two clearly opposing sides.
The Fed paused rate increases, and two governors opposed the pause, arguing for a 25-basis-point increase.
ECB Governing Council member Joachim Nagel said there were strong arguments for raising rates the following month.
Fed Governor Christopher Waller said a 50-basis-point increase should be considered at the December meeting.
The Fed is scheduled to meet, with markets pricing in a 25-basis-point rate increase.
- ECB deposit rate
- Expected to rise by 0.25 percentage points to 2.75%
- Fed meeting
- 8–9 December
- Possible Fed increase
- 50 basis points, the largest increase since 2022
- Inflation target
- 2%
- Joachim Nagel
- Member of the ECB Governing Council and president of the Bundesbank
What people are saying
I think a 50-basis-point increase in the official interest rate should be considered at the December meeting
an increase of only 25 basis points would put our credibility at risk
given the current outlook, it seems clear to me that the FOMC must implement at least two more 25-basis-point rate increases
too high