Seventy of seventy-three, and a survey that agreed

The poll. In a Reuters survey taken from 5 to 8 October, all but three of 73 economists expected the European Central Bank to hold its deposit rate at 2.50% at its meeting ending on Thursday 29 October; 64 expected a quarter-point rise in December¹. Inflation was 3.8% in September, nearly double the 2% target¹. Economists expected it to average 3.7% this quarter¹.

The argument for waiting. The poll named it: so far there has been “scant evidence” that higher energy prices are spilling into other consumer prices, which would be the trigger for further rises¹. “Market rates have increased meaningfully and are doing some of the job for the ECB,” said Anatoli Annenkov of Société Générale¹.

The week’s evidence. On Friday the flash composite PMI for the euro area fell to 51.9 in October from 53.1, below every forecast in a Reuters poll². France fell back into contraction; Germany slowed but kept growing². Inside the survey was the line committees read first: input costs rose faster for a second month, driven by energy, fuel and transport, while firms raised their own selling prices more slowly than in September². “There is still little evidence of second-round effects, which will be reassuring for the ECB,” said Harry Chambers of Capital Economics².

The bond market’s vote. French ten-year yields rose nearly 27 basis points over the week to about 5.05% on Friday, and the spread over German Bunds stayed above 170 basis points, its widest since the euro-zone debt crisis³. Desk arithmetic: 170 basis points is 1.7 percentage points a year on every euro France borrows for ten years. That is tightening, of a kind, delivered without a meeting.

What to expect, without forecasting. This desk does not forecast decisions. It reads what a committee is looking at. On Thursday it will be looking at costs rising, prices following slowly, wages not yet moving and one large member state’s borrowing cost rising on its own. That is a list that argues for patience, and for keeping the next step open.

For you. If you are fixing a mortgage or a savings rate this autumn, the price that matters is the market rate your bank quotes, which already moved. The committee’s decision on Thursday is the second print, not the first. Nothing here is advice.