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2025-12-14 22:30:48
The Financial Times analysis points out that given ECB President Christine Lagarde's statement that the bank is in "good shape," investors generally expect the ECB to keep its benchmark interest rate unchanged at 2% next week and instead focus on its economic forecasts. Lagarde stated this week that ratemakers may again raise their growth forecasts for the Eurozone at their meeting. These stronger growth forecasts, along with persistent inflation, have recently prompted traders to increase their bets on an ECB rate hike next year. However, given the ongoing debate surrounding a potential shift in monetary policy direction, and the fact that swap market pricing has only changed in recent weeks, traders will be paying close attention to clues about the timing of rate hikes; any adjustments to policy signals are expected to be subtle. George Moran, a Eurozone economist at RBC Capital Markets, said he expects the ECB not to raise rates in 2026 because "cyclical tailwinds are likely temporary," adding that the ECB has "made it clear that it does not want to overreact to temporary deviations from its targets."
