The September European Central Bank (ECB) minutes are viewed as dovish relative to market expectations, according to Danske Bank strategists. The minutes offered little forward guidance and did not support the three additional rate hikes currently priced in by the market. ECB members noted the absence of second-round effects from the energy shock and only limited indirect effects, emphasizing that higher long-term yields could significantly weigh on growth and inflation. As a result, the sharp rise in longer-term yields is seen as a factor that should limit the need for further ECB tightening [1].
In the United States, labour market data continues to indicate resilience. Continued claims increased more than expected to 1.716 million in the week ending 26 September, up from 1.699 million previously. Despite this increase, continued claims remain low compared to recent years. Initial jobless claims fell slightly, contrary to expectations of a small increase, although the previous week’s figure was revised higher. Overall, the data points to a relatively tight labour market [1].
Regarding US monetary policy, Federal Reserve official Waller stated that further rate hikes are needed but emphasized flexibility on the timing, noting that hikes do not need to occur at consecutive meetings. This stance is more explicit about the need for additional tightening than recent comments from Jefferson and Williams, but remains consistent with the message that there is no urgency to hike again at the October meeting [1].
CONCLUSION
The ECB minutes suggest a limited need for further rate hikes, contrasting with market expectations for additional tightening. Meanwhile, US labour market data remains robust, and Fed officials signal a flexible approach to future rate increases. Overall, the market may adjust expectations for near-term monetary policy tightening in both regions.