Euro area central bankers are widely expected to hold interest rates at current levels on Thursday as they become more cosy in their “good place.”

In fact, after three consecutive decisions to leave key interest rates unchanged, the European Central Bank looks ready to maintain that policy for quite a while, according to Deutsche Bank. “We do not expect any further interest rate cuts in the foreseeable future. Financial markets are also pricing in only a marginal easing of around three basis points over the next 11 months. This corresponds to an implied 12% probability of a further rate cut.”

Notably, talk of higher rates continues to make the rounds, Deutsche explained. “Partly due to the looming inflationary pressure stemming from Germany's expansionary fiscal policy and structural labour market bottlenecks, we now project a first rate hike of 25 bps in mid-2027.”

Isabel Schnabel, an ECB executive board member, told Bloomberg News she was “comfortable” with market expectations that the next move will be a hike, adding that such a change is unlikely anytime soon. (LiveSquawk – Continue Reading)

UK inflation fell below estimates for a third consecutive month, raising hopes of a Christmas rate cut from the Bank of England.

The Office for National Statistics said headline consumer price inflation (CPI) slowed to 3.2% y/y in November, undershooting the 3.5% consensus forecast and falling sharply from October’s 3.6% reading. Core CPI also eased to 3.2%, two tenths softer than both expectations and the prior month.

Statisticians reported a marked slowdown in goods price inflation, with the annual rate slipping to 2.1% from 2.6%, while CPI services inflation eased modestly to 4.4% from 4.5% in October.

Grant Fitzner, the ONS’s chief economist, said lower food prices — which typically rise at this time of year — were the main drag on inflation, with notable declines in cakes, biscuits and breakfast cereals. (LiveSquawk – Continue Reading)

Business confidence in Europe’s largest economy has recorded its second straight drop as managers turned more pessimistic about the coming six months.

The decrease was the third this year with September’s decline, and all three came in the final four months of 2025, an indication of persistent weakness in business morale in the world’s fourth-largest economy.

Germany’s Ifo economics institute said Wednesday that its latest survey of domestic companies produced a fall in the headline business climate index to 87.6 points – the worst result since May – from a downwardly revised 88.0 and the market expectation of 88.1.

This month’s expectations component for the coming six months eased to 89.7 points to match September’s result, which was the lowest since March. The reading undershot November’s downwardly revised mark of 90.5, which was also the estimate. (LiveSquawk – Continue Reading)