French Spreads Widen: European Central Bank Communication in Focus – Nordea

A 25bp ECB rate rise remains likely in December, according to Nordea’s Jan von Gerich. He expects rates to stay unchanged at the October Governing Council meeting. Von Gerich points to sharply wider French government bond spreads and tighter financing conditions. Higher French yields affect much of the euro area, he notes, and could shape the tone and timing of ECB policy.

25bp December hike in focus as ECB holds

"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.)