Standard Chartered Expects ECB December Rate Hike

Standard Chartered has reversed its earlier pause call and now forecasts the European Central Bank will raise its deposit rate by 25 basis points to 2.75% in December. The brokerage’s economists pointed to September euro-zone inflation that accelerated more than expected, largely from energy prices, plus business-activity data showing greater economic resilience than they had assumed. In a client note they wrote that the ECB will likely “opt to take rates slightly into restrictive territory,” seeking insurance against higher energy costs feeding into wages and broader prices, while noting limited evidence so far of such second-round effects. The view aligns the bank with major Wall Street firms already expecting another year-end hike. Markets assign about a 65% probability to a December move, according to LSEG data. The ECB meets next on October 29; Standard Chartered still favors December, when policymakers will have fresh forecasts and another inflation reading. The central bank raised rates last month along with several other major central banks.