ECB faces French bond turmoil and Iran war energy shock at October meeting
Briefing by News4U · First published
ECB expected to hold rates at 2.5% next week amid French bond selloff and Iran war-driven energy prices above $100.
RTÉ Business reports the ECB is expected to leave its key interest rate unchanged at 2.5% when it meets next Thursday, with the Iran war keeping energy prices above $100 and French 10-year borrowing costs hitting 24-year highs above 5%. [1]
The premium investors demand to hold French bonds over German ones has risen to 170 bps from 92 bps last month, while headline inflation stands at 3.8% and core inflation at 2.5%. [1]
Markets price in at least two rate hikes by mid-2027, and analysts say the ECB could use its Transmission Protection Instrument to shield other countries if a French crisis spreads. [1]
Sources
- Ready for a French test? - 5 questions for the ECB
RTÉ Business · · Full text