Symbolic imageHot US inflation cements Fed hike as ECB and Bank of England lean toward more tightening
US consumer prices rose faster than forecast in October, and the Financial Times says a December Fed hike is now sealed. The ECB and the Bank of England also kept further rate rises on the table.
US consumer prices rose 0.4% in October, above expectations, according to Wall Street Journal reporting on Tuesday, 10 November. The Financial Times says a larger December move is now in play, noting that energy inflation largely dropped out of the headline rate, which feeds worries about persistence. Handelsblatt reports a rising risk of 50 basis points instead of 25. Fed governor Christopher Waller had warned before the release that stubborn inflation puts a bigger step on the table, and Bloomberg reports that Fed official Logan favors at least two hikes and says the pace could quicken. Treasury yields rose and the dollar strengthened, according to the Wall Street Journal and Bloomberg.
ECB heads for a third hike
ECB chief economist Philip Lane told Bloomberg TV on Tuesday that a third hike this year would be wise if the data do not change before the December meeting, and he expects inflation a little above 4% at year-end. Euro-area prices rose 4.0% in October after 3.8% in September, driven by energy costs from the oil shock of the Iran war, Handelsblatt reports. The ECB raised rates in June and September and holds its deposit rate at 2.50%.
Bank of England keeps options open
Clare Lombardelli declined to rule out back-to-back rises, the Financial Times reports. She said high energy prices and resilient UK growth make a case for a further increase "in the near term"; the Wall Street Journal headlines it as a signal that another rise is likely.