ECB Minutes Cite Inflation Risks, Debate Rate Hikes

After raising rates in September, the European Central Bank is weighing the risk that further tightening could weaken eurozone growth, with meeting minutes highlighting the drag from higher long-term borrowing costs and calling on governments to pursue reforms and sound public finances. The minutes offer no firm guidance, citing uncertainty including geopolitical risks, but market expectations remain divided: a Reuters poll found most economists expect another increase in December, and Nordea’s chief analyst sees hikes in December and March. Danske Bank analysts, by contrast, judge the minutes dovish relative to market pricing and say they do not justify three further hikes, pointing to limited spillover from the energy shock and the possibility that elevated bond yields will curb inflation and growth.