Major central banks lean toward tightening, with the Bank of England at 4% and US jobs data feeding December Fed hike bets. China's producer inflation hit a four-year high on oil costs, while the ECB succession race to replace Lagarde heats up.
Central banks are weighing interest-rate decisions against persistent inflation. In the US, the Federal Reserve's rate policy has become a political flashpoint between the central bank and President Donald Trump.
China's producer inflation reached its highest level in about four years, driven by oil costs, according to Nikkei Asia and Handelsblatt. Global Times reports that consumer prices rose 0.7% in October.
Dutch nominee Klaas Knot says he would not hesitate to act in a debt crisis and would be ready to invent new crisis-fighting tools if required, the Financial Times reports. Euro zone finance ministers are to discuss ECB appointments but await guidance from leaders, according to Reuters.
Producer prices in China rose 5.7 percent in October, according to Bloomberg, a post-Covid high, as higher energy prices pushed up costs. Consumer prices edged down, with weak domestic demand weighing on them, the Financial Times reports.
ECB's Lagarde said inflation is likely to stay high in the near future and, according to Politika, could not say with certainty whether the ECB will raise rates in December. Knot and De Cos are the only two candidates for ECB president, Bloomberg reports, and De Cos says vigilance on inflation risks is needed.
US employers added 165,000 jobs in October, far above forecasts, and unemployment fell to 4.1%, the Bureau of Labor Statistics reported on Friday. Markets now see a Federal Reserve rate hike in December as more likely.
The Bank of England raised its key rate by 25 basis points to 4% on Thursday, its first hike in three years. It warned that further increases may follow.
Eurozone inflation rose to 4.0% in October from 3.8%, a three-year high and double the ECB's target. Analysts expect another rate hike in December.
Australia's central bank raised interest rates to an 18-year high in a split vote, its fifth increase this year, according to Reuters and the Financial Times. Euro countries must nominate candidates for the ECB presidency by Friday, Reuters reports, while Handelsblatt reports that Nagel considers a rate hike in December likely.
The Bank of England is expected to raise its rate to 4% on Thursday, and Australia's central bank to hike for a fifth time on Tuesday. Reuters reports the ECB and Bank of Japan also point toward tightening.
Reuters reports that the Bank of England is poised to raise rates but may push back on market bets for more increases. In Australia, home prices fell for a seventh month according to Reuters, and the Wall Street Journal says the Reserve Bank is preparing another rate rise.
The Bank of Japan kept its rate at 1.25% but said underlying inflation is consistent with its 2% target. US and euro-area officials are also pointing to higher rates.
The US economy grew at a 3.4% annualized rate in the third quarter, while September inflation rose to 3.6%. Markets expect the Fed to raise rates in December.
ECB president Christine Lagarde announced on Thursday that she will step down on 7 February 2027, months before her term ends. The ECB left its key rate at 2.5% the same day.
The US Federal Reserve left interest rates unchanged on Wednesday, as widely expected, according to Daily Sabah. The Guardian reports that the central bank raised rates in the previous month for the first time since 2023, a move that angered Donald Trump.