ECB's DeMarco Backs October Rate Hike Amid Stronger Core Inflation

European Central Bank (ECB) Governing Council member Alexander DeMarco has expressed support for a potential interest rate hike in October, citing 'stronger core inflation' as a reason to act. In a recent statement, DeMarco noted that the current economic situation is 'quite fragile,' and the recent rise in long-term bond yields is 'quite worrying.'

DeMarco's comments come on the heels of the ECB's decision to lift interest rates by 25 basis points in September, citing inflation pressures from the Middle East. As of writing, money markets have priced in a 57% chance that the ECB will hold rates unchanged at the October 29 meeting, while the odds of a December rate hike are 84%, according to Prime Terminal.

DeMarco's statement has sparked interest among market participants, who are eagerly awaiting the next move from the ECB. The central bank's primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates, which can have a significant impact on the Eurozone economy.