ECB on October 29: rate expected to stay at 2.5 percent, economists expect a hike in December
Eurozone inflation is 3.8 percent, the highest since 2023, and French bonds are at their highest level in 24 years.
At its meeting on Thursday, October 29, the European Central Bank (ECB) is widely expected to hold its rate at 2.5 percent, after raising it in June and September to fight inflation driven by the war with Iran and its effect on energy prices. That is reported by RTE, and analysts at RSM confirm the expectation.
What is inflation? Headline inflation in the eurozone in September was 3.8 percent, the highest since 2023, while core inflation (excluding food and fuel) rose to 2.5 from 2.4 percent. Oil is almost 80 percent more expensive this year.
What follows in December? Economists polled by Reuters expect a quarter-point hike in December, and markets price in at least two hikes by mid-2027. RSM expects one more hike in December, taking the deposit rate to 2.75 percent. These are expectations, not decisions.
What is another issue? French bonds. French 10-year borrowing costs reached their highest level in 24 years, above 5 percent, and the spread against German bonds rose to 170 basis points from 92 at the previous meeting. The ECB is watching it, but is not expected to activate its transmission protection instrument soon. Lagarde says France should fix its finances through fiscal consolidation.
The question of leadership also draws attention. Lagarde could become chair of the World Economic Forum as early as November, which would open a vacancy, and Klaas Knot and Pablo Hernández de Cos are mentioned as frontrunners to succeed her. Isabel Schnabel has resigned, and chief economist Philip Lane leaves in May. Lagarde's term was due to end next October.
What does it mean for North Macedonia? The denar is pegged to the euro, and eurozone rates affect borrowing conditions in Europe. We state no estimate of how directly the decision will be felt in Macedonian loans, since we did not check that. High energy is, on the other hand, already visible here through fuel prices.
What is not known? It is not known whether the ECB will actually hold the rate, or what signals Lagarde will give for December. It is not known whether the French situation will change the tone. It is also unclear when Lagarde's successor will be known.
What does it mean? A hold would be a pause, not the end of hikes. The real signal will be what central bankers say about December.
MKNews Hub · Macedonia · October 27, 2026
