French fiscal risks raise chance of ECB pause after December - Yahoo Finance Australia

Investing.com -- Growing fiscal risks in France could prompt the European Central Bank to pause interest rate hikes after December, or earlier if financial stress spreads across the eurozone, according to Citi analysts. Citi said the ECB is shifting its focus towards financial conditions from inflation concerns, raising questions about how much further it can tighten monetary policy. The bank's rates strategists highlighted a reversal in the relationship between ECB rate expectations and the spread between French and German government bond yields, suggesting markets increasingly view policy as overly restrictive. A December rate increase is almost fully priced in, alongside nearly two further hikes in 2027, according to Citi.