The European Central Bank is likely to raise borrowing costs next month for the third time since the Iran war began, Governing Council member Ante Zigman said. Inflation has continued to rise in October, with Zigman noting there is a rather big chance that interest rates will rise in December. The Croatian official joins other policymakers in signaling another quarter-point increase in the deposit rate at the ECB's final policy gathering of 2026, with consumer prices now surging at twice the 2% pace that's targeted.
While markets are betting on further monetary tightening in 2027, Zigman would not be drawn, saying it is too soon to tell what action will be required. He pointed to optimism in energy markets since Democrats won the US midterm elections, noting that the crude oil price has fallen almost 20% in the last few days. Whether this stays that way, whether energy prices fall or whether there will be some other surprise, it is hard to say.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing