ECB Rate Hike Odds Rise as Standard Chartered Joins Major Banks

Standard Chartered has joined major Wall Street banks in predicting a December rate hike from the European Central Bank (ECB). The bank now expects a 25 basis point increase to 2.75%, reversing its previous call for a pause.

This change in forecast comes after stronger-than-expected inflation and resilient economic activity reinforced the case for further tightening. Euro zone inflation accelerated more than expected in September, driven largely by higher energy prices, while recent business activity data pointed to a more resilient economy than previously anticipated.

The ECB raised interest rates last month as policymakers sought to contain inflation risks stemming from higher energy costs and resilient economic growth. Standard Chartered's economists wrote that policymakers may seek insurance against the risk of higher energy prices feeding through to wages and broader price pressures.