ECB Poised for Final 25bp Rate Hike in December as Euro Gains on Weaker US Inflation

The ECB is expected to raise rates by 25 basis points in December, boosting the Euro amid weaker US inflation and reduced Fed hike expectations.

The European Central Bank is anticipated to implement a final 25 basis point interest rate increase in December, raising the deposit rate to 2.75%, according to FX Street citing TD Securities. This move comes as softer inflation data from the US has dampened expectations for further Federal Reserve rate hikes.

The Euro has responded positively, with EUR/USD trading around 1.1363 on Wednesday, marking a 0.20% gain for the day. This follows a dip to 1.1312 on Tuesday, which was its lowest level since May 2025, FX Street reported.

For Japanese investors, these developments highlight potential shifts in currency valuations that could affect FX trading strategies and cross-border equity investments, particularly given the ongoing divergence in monetary policy between the ECB and the Federal Reserve.

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By Sama Kane

Tokyo Overnight

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