|

European Central Bank: September hike risk rises with oil and PMIs – Commerzbank

Commerzbank analysts highlight that ECB President Lagarde has opened the door to a September rate hike, with sources suggesting euro area inflation must improve markedly to avoid tightening. They stress that current conditions again match ECB’s baseline scenario, while weak PMIs and Oil-driven inflation risks make preventing a hike an uphill struggle for the Euro area economy.

Lagarde guidance keeps tightening expectations alive

"Lagarde opened the door for a rate hike in September, stating that inflation risks are pointing upwards again and that some Council members already mulled over the need to hike as early as this week. Although changes to the ECB's official wording compared to the June assessment were subtle, Lagarde reminded that the current situation aligns again more with the ECB's baseline scenario."

"This is in contrast to the Sintra assessment three weeks ago, when inflation risks appeared more balanced. Sources confirmed that the inflation outlook would need to improve again markedly to prevent a September hike, which looks like an uphill struggle given the current oil price dynamics."

"ECB: Council is prepared to hike in September unless euro area inflation outlook improves markedly. Nagel sees ECB in good position, says "it was right keep rates steady this time"."

"ECB considers several options to mitigate its financial losses, including not paying interest to banks on some of their excess reserves or even charging them fees."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Author

FXStreet Insights Team

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

More from FXStreet Insights Team
Share:

Editor's Picks

AUD/USD consolidates above 0.7000; remains close to monthly top

AUD/USD holds steady above 0.7000 during the Asian session on Friday, trading just below the previous day's monthly low amid diverging forces. A hawkish RBA continues to support the Aussie, while the recent decline in US bond yields keeps the US Dollar depressed near a three-week low. However, oil-driven inflation fears reinforce Fed hike bets, which, along with geopolitical risks, could benefit the safe-haven buck and cap the currency pair.

USD/JPY bounces off one-month low; climbs to 157.00 amid reviving USD demand

USD/JPY rebounds from the 156.00 neighborhood, or a one-month low touched during Friday’s Asian session, with bulls looking to extend momentum beyond 157.00 amid the emergence of some US Dollar buying. Meanwhile, Japan's National CPI rose to a nine-month peak and reaffirmed BoJ rate-hike bets, which could support the Japanese Yen and cap gains for the currency pair.

Gold hits fresh three-month low below $4,000 amid surging energy prices

Gold slides to a fresh three-month low at $3,986.74 in the Asian trade on Friday. The precious metal faces intense selling pressure, following a consolidation breakdown that took place on the range between $4,227.90 and $4,066.64 in the past three weeks.


Cardano: Whale selling deepens correction
Cardano (ADA) edges higher by nearly 2% on Friday, following a roughly 6% decline the previous day. The pullback aligns with the sell-side appeal among large-wallet investors, commonly referred to as whales, and Cardano derivatives. The technical outlook for ADA is bearish, with downside momentum persisting. Whales are losing their appetite for holding ADA tokens, fueling near-term selling pressure.
The Bank of England just got its clearest reason to hike. Here's what it's really watching

UK inflation as measured by the CPI accelerated to 3.5% YoY in September, up from 3.1% in August, according to the Office for National Statistics. This is the highest level since October 2025, exceeding economists' expectations of 3.4% and pushing inflation further from the BoE's 2% target.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.