Philip Lane said it would be reasonable for the ECB to raise rates again in December. The European Central Bank's chief economist spoke on the morning of November 10, and his words were published at 11:44 Moscow time - in the middle of the European session.
Who is saying this. The ECB's chief economist prepares the bank's forecasts for inflation and the economy. The governing council relies on these forecasts when deciding on rates.
Why this matters to a trader. Such phrases read as a hint at the December decision. The move plays out in euro pairs and in the DXY dollar index right during the session.
What did Lane say?
- "reasonable to raise in December if the data don't change" - that is how he described the next step on rates.
- "slightly above 4%" - that is how he sees inflation by the end of the year.
- "the peak in inflation is still ahead" - Lane does not expect a slowdown yet.
- Core and food inflation - he expects both to accelerate. Core inflation is prices excluding food and energy.
Why do these words carry more weight than an ordinary comment?
Higher weight. The chief economist is responsible for the forecasts the governing council relies on when deciding on rates. The next meeting is in December, and Lane has effectively set out the baseline scenario for it.
- France. He addressed it separately: "French budget problems must be solved in Paris."
- The eurozone economy. Lane called its resilience "quite encouraging." He sees no reason in the data to slow down tightening.
What does this mean for a trader?
Two sources of movement in one day. Strong US labor market figures have already come out.
- 165k new jobs versus a forecast of 65k.
- 4.1% - unemployment fell from 4.2%.
- 0.4% - that is how much average hourly earnings rose.
The key point: in euro pairs and the DXY, the ECB's hawkish rhetoric and strong US labor market data are converging.
What's next?
- Today - US CPI. CPI is the consumer price index.
- Friday - PPI. PPI is producer prices.
- December - the ECB meeting. Until then, every eurozone inflation figure will be read as a hint as to whether the ECB will back up Lane's words with action.
Where to watch. Both US releases are in the economic calendar. If you trade such releases, check the conditions in advance and find a challenge that suits your style.
Been sitting in the euro through central bank speeches?
ECB headlines land in the middle of the European session. The euro moves dozens of pips in a minute: you are either already in a position or chasing the move. Prop programs treat this kind of trading differently: some allow news, some close the account for entering a couple of minutes before an official's speech, and on top of that there are daily drawdown limits. These points are in the program rules, and they are visible before you pay for the evaluation. A filter by market and by news-trading rules will show you where the euro can be traded around such headlines.