Global Market: ECB may pause rate hikes after December amid growth risks - The

However, President Christine Lagarde signalled the possibility of another rate increase in December, warning that elevated and rising energy costs were adding to inflationary pressures and risks.Read more: Global Market Today: Asian stocks slide as tech earnings disappoint, AI fears mountThree policymakers told Reuters that a rate hike at the December 17 meeting was almost certain, unless energy prices witness a sharp and unexpected decline.

Such a move would take the ECB's deposit facility rate to 2.75%.However, policymakers expect the central bank to pause its rate-tightening cycle after the December increase, as the impact of rising bond yields is likely to dampen economic activity and price pressures over the coming years.Read more: US Markets Today: US stocks end lower as Alphabet revenue miss revives AI capex jittersECB estimates circulated ahead of Thursday's meeting indicated that the recent increase in bond yields could reduce cumulative economic growth by 100 basis points and inflation by 90 basis points in 2027-28, compared with the central bank's September baseline projections.The estimates suggest that tighter financial conditions could partly offset the inflationary impact of higher energy prices, potentially reducing the need for further monetary tightening beyond December.The ECB is therefore expected to balance persistent energy-driven inflation risks against the growing impact of tighter financial conditions on the euro zone economy.(Disclaimer: This article is based on inputs from agencies. These do not represent the views of The Economic Times.)