ECB's Lane Says Data Will Decide December Rate Move

The European Central Bank is weighing all the data due before its final interest-rate meeting of the year, Chief Economist Philip Lane said on Friday in Frankfurt, Bloomberg reported, as markets continue to lean towards another hike in December.

Lane said officials had decided it was time to “gather the information between now and December and see what we do,” according to Bloomberg. He added that while the energy shock will spill over into other parts of the economy, monetary policy should aim to keep that process contained.

Inflation at double the target

Bloomberg said euro zone inflation quickened to double the ECB’s 2% target in October, while third-quarter economic growth was solid at 0.4%. The ECB kept borrowing costs unchanged at its October meeting, with Reuters putting the key deposit rate at 2.5%, but officials have been signalling a willingness to raise rates again in December.

According to Reuters, ECB projections show inflation running above 4% in the coming months before falling back quickly from early spring, when high year-earlier figures drop out of the calculation.

Other policymakers lean towards a hike

Lane’s remarks follow a string of comments from fellow policymakers. Bundesbank President Joachim Nagel said in a speech in Berlin on Tuesday that “an interest rate hike in December is very likely necessary,” Reuters reported. Such a move would be the ECB’s third hike this year.

Nagel said inflation was approaching the ECB’s adverse scenario and that price pressures would exceed the bank’s September projections. He attributed the surge mainly to energy, adding there was little evidence of second-round effects, according to Reuters. The news agency said a December move was not fully priced in, with investors expecting between two and three hikes over the coming year.

Bulgarian central bank chief Dimitar Radev said on the same day that the October pause was a decision to assess the evidence rather than a sign that tightening was over, Reuters reported.

ECB President Christine Lagarde told a conference in Milan on Thursday that the bank was looking at indicators to determine whether a hike is needed, Reuters reported. She described the situation as very hard, with energy costs pushing growth down and prices up, and said: “To disentangle the supply-driven and the demand-driven shock is very difficult.”

What’s next

Policymakers will assess incoming data ahead of the December meeting, the last of the year. Lagarde has said she will step down on February 7, 2027, ahead of the formal end of her mandate, according to Reuters. Separately, EU finance ministers are scheduled to meet on November 9, The European Times reported.

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