Before each European Central Bank (ECB) meeting, we share our analysis of upcoming monetary policy issues, expected decisions, and their implications for financial markets.
At this stage, there is no reason for undue concern about France’s ability to finance its debt.
At a glance
- A hold on key interest rates is widely expected at the ECB’s 29 October meeting, with the deposit rate projected to remain unchanged at 2.50%.
- Swiss Life Asset Managers expects a rate hike in December, followed by a pause throughout 2027, while markets are pricing in two additional hikes next year.
- A resolution of the conflict in the Middle East could help ease inflationary pressures stemming from the surge in energy prices.
- French sovereign debt remains under close scrutiny, with the OAT-Bund spread recently widening to 160 basis points amid ongoing political and fiscal uncertainties.
- In bond markets, wider spreads are enhancing the attractiveness of corporate credit, particularly in the Investment Grade and High Yield segments, for investors seeking yield and carry.
