French Debt Woes Reducing Need for ECB Rate Hikes

1008 GMT - The European Central Bank is unlikely to repeat its hawkish tone when it meets next week due to concerns about France's budget, Carsten Brezski at ING says in a note. Commentary at the previous meeting suggested a potential hike in both October and December, but the French fiscal and political crisis is eroding the need for additional rate increases, he says. "The surge in bond yields on the back of the French crisis is already imposing a new restrictive monetary policy stance... Or in other words, the bond market has taken over the ECB's job." This makes a hold by the central bank very likely next week, delaying any rate decision to December, Brezski. At the meeting, investors will also be eyeing comments on whether the ECB could intervene to support France, he adds.