Fed hikes rates to 3.75%-4%; Euribor awaits ECB's move
The Fed hiked rates to 3.75%-4% unanimously, its first hike since 2023. ECB faces Oct 29 with CPI at 4.3%.
English · Original discussion in Spanish · Published
The Fed raises rates to 4% and Euribor watches October 29
The Federal Reserve has hiked interest rates for the first time since 2023, unanimously, into a range of 3.75%-4%. The number matters less than the signal. This same institution, which months ago lowered the price of money three times to protect the labor market, has now reversed course. Leading this movement is Warsh, the new Fed president, who has abandoned any pretense that inflation was a thing of the past.
Why Euribor should start trembling
The arguments for tightening monetary policy are mounting on both sides of the Atlantic, with 2026 CPI at 4.3% and a 2% civil service salary increase. The euro is depreciating against the dollar, raising European import costs and adding fuel to the price problem. The ECB's next meeting is marked in red: October 29.
Some argue that the ECB will have no choice but to act at that meeting; against this, weigh weak growth and the margin it still has for further easing. The most repeated argument concerns the differential: maintaining rates far below those of the United States for a long time has effects on the exchange rate that eventually boomerang back as imported inflation.
3,703 mortgage executions: the social cost is here
The procedures for foreclosures on primary residences have risen 27% year-on-year, reaching 3,703 in the second quarter of 2026. This is the worst record since early 2017. The narrative of monetary normalization clashes with this statistic: every tenth of a percentage point increase in rates translates, after a delay, into unpaid bills.
At the same time, public debt interest payments threaten to reach the stratosphere of the budget. The conclusion is unpleasant: it should have been done sooner, and now all options come with a cost. With energy strained in the Strait of Hormuz and crude oil holding high prices, maneuvering room is shrinking.
The question is not whether Euribor will feel the move, but how long it will take to translate into the bill of a mortgage signed in recent years. October 29 or waiting until winter?
The Federal Reserve has hiked interest rates for the first time since 2023, unanimously, into a range of 3.75%-4%. The number matters less than the signal. This same institution, which months ago lowered the price of money three times to protect the labor market, has now reversed course. Leading this movement is Warsh, the new Fed president, who has abandoned any pretense that inflation was a thing of the past.
Why Euribor should start trembling
The arguments for tightening monetary policy are mounting on both sides of the Atlantic, with 2026 CPI at 4.3% and a 2% civil service salary increase. The euro is depreciating against the dollar, raising European import costs and adding fuel to the price problem. The ECB's next meeting is marked in red: October 29.
Some argue that the ECB will have no choice but to act at that meeting; against this, weigh weak growth and the margin it still has for further easing. The most repeated argument concerns the differential: maintaining rates far below those of the United States for a long time has effects on the exchange rate that eventually boomerang back as imported inflation.
3,703 mortgage executions: the social cost is here
The procedures for foreclosures on primary residences have risen 27% year-on-year, reaching 3,703 in the second quarter of 2026. This is the worst record since early 2017. The narrative of monetary normalization clashes with this statistic: every tenth of a percentage point increase in rates translates, after a delay, into unpaid bills.
At the same time, public debt interest payments threaten to reach the stratosphere of the budget. The conclusion is unpleasant: it should have been done sooner, and now all options come with a cost. With energy strained in the Strait of Hormuz and crude oil holding high prices, maneuvering room is shrinking.
The question is not whether Euribor will feel the move, but how long it will take to translate into the bill of a mortgage signed in recent years. October 29 or waiting until winter?
Summary of a discussion on Burbuja.info - Foro de economía, actualidad y política., translated from Spanish and reviewed before publication. Read the full discussion (16 replies).
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