Fed’s Waller Signals More Hikes as ECB Backs September Rate Rise

Tightening was the theme on both sides of the Atlantic this week. Federal Reserve Governor Christopher J. Waller said he anticipates additional interest-rate increases if economic data continue to come in as expected. The European Central Bank published minutes showing unanimous support for its September hike, while Executive Board member Philip Lane repeated that the ECB is "not on a pre-committed rate path."

One force ran through almost every release: the energy shock tied to the conflict in the Middle East. It is lifting inflation in Europe and shaping the Fed’s outlook. The U.S. Treasury added to that backdrop by sanctioning 17 tankers it described as the remnants of Iran’s shadow fleet. Away from rates, the ECB set out a timeline for a digital euro, and the Fed released its 2025 Survey of Consumer Finances.

Interest rates: the Fed and ECB lean toward tightening

In a speech at the Istanbul Economic Forum, Waller explained why he supported the Federal Open Market Committee’s September decision. That decision raised the policy rate 25 basis points to 3.75 percent to 4 percent, after nine months of holding it steady. He said the move reflected "a preponderance of evidence over several months" that risks had shifted toward inflation. He added that for at least the near term, "policy will be focused on the inflation side of our mandate."

Waller pointed to the Summary of Economic Projections as a signal of where rates are likely headed:

• 16 of the 18 participants who submitted projections in September anticipated at least one more hike this year
• Four of those 16 expected two additional hikes
• Eight participants expect rates to be 50 basis points higher at the end of 2027 than today
• Futures markets, he said, see an 85 percent chance of at least one hike by the end of the December meeting

He added that hikes "do not need to come at consecutive meetings." Waller noted the views were his own.

The ECB’s account of its 9-10 September meeting shows that all Governing Council members backed Lane’s proposal to raise the three key rates by 25 basis points. That decision lifted the deposit facility rate from 2.25% to 2.50%. According to the account, markets had priced in 84 basis points of hikes overall by the end of 2027. Surveys of analysts, by contrast, suggested the deposit rate would plateau at 2.50%. Members said communication should remain neutral, presenting the move as neither part of "a predetermined tightening cycle" nor "the last rate hike."

Lane’s speech in Frankfurt struck the same note. He said it was "prudent to raise the policy rate from 2.00 to 2.50 per cent" over the June and September projection rounds, and that the ECB remains on a "middle path," deciding meeting by meeting.

Energy, inflation and the Middle East

Both central banks tied their thinking to energy. Waller cited oil prices driven very high by the conflict in the Middle East, the artificial intelligence buildout and trade conflicts. He noted that August core PCE inflation was 3 percent over 12 months, which he called "higher than we want."

In the euro area, the ECB account recorded headline inflation of 3.3% in August, with energy price inflation at 14.3%. Lane said the latest September figures showed:

• Headline inflation at 3.8 per cent
• Energy inflation at 18.8 per cent
• Core inflation at 2.5 per cent, up from 2.4 per cent

Lane described a "second wave" of the energy shock, with oil prices shifting significantly higher since July alongside a sustained surge in gas prices. In an interview with Ansa, he said energy remains "the dominant issue." He also said the ECB has "not seen, so far, very strong second round effects" into wider inflation.

The U.S. Treasury’s action fits into the same story. Its Office of Foreign Assets Control designated 17 vessels under E.O. 13902 as part of Operation Economic Outcast. Treasury said the action "effectively neutralizes the vast majority" of Iran’s remaining shadow fleet. Foreign financial institutions dealing with designated persons may face secondary sanctions.

Bond yields, currencies and financial conditions

The ECB account discussed a global rise in long-term yields. It said the rise began in the United States, driven by heavy debt issuance, "concerns about the fiscal trajectory" and inflation uncertainty. Lane said a rise in long-term rates driven by global factors "slows down the European economy and, on its own, reduces the inflation rate." He linked part of the move to the AI investment boom and to heavy long-term debt issuance by U.S. firms investing in AI.

On currencies, the account said the euro had appreciated by 1.9% against the US dollar since the previous meeting. It also noted a coordinated intervention by US and Japanese authorities to support the yen.

The ECB’s SESFOD survey of 26 large banks found that credit terms eased slightly for the fourth consecutive quarter and that hedge-fund leverage rose slightly. However, liquidity and trading "deteriorated for equity and commodity derivatives."

Beyond rates: digital money and household finances

ECB board member Piero Cipollone said the ECB aims to be ready for a potential first issuance of a digital euro in 2029, assuming the legislative process concludes by the end of 2026. He stressed that the digital euro would not pay interest and that holdings would be capped. The ECB tested limits from €500 to €3,000.

The Fed’s 2025 Survey of Consumer Finances showed real median net worth rising by 2 percent to $215,900. It also found that the share of families with debt payment-to-income ratios greater than 40 percent increased from 6.5 to 8.6 percent, a level the Fed said was last seen in the 2013 survey.

What it means for gold and silver holders

This week’s releases touch forces that have historically pulled precious metals in different directions.

• Higher rates and yields: Gold and silver pay no interest. Expectations of higher policy rates and rising bond yields have historically raised the opportunity cost of holding them and have often supported the dollar, which can weigh on metal prices.
• Inflation and energy: Persistent, energy-driven inflation is a condition in which investors have traditionally looked to precious metals as a store of value.
• Geopolitics and sanctions: Periods of geopolitical tension have historically drawn attention to gold as a perceived safe haven. The use of financial sanctions has been part of the discussion about why some countries hold reserve assets outside any single financial system.
• Currencies: Gold is mainly priced in dollars, so moves such as the euro’s appreciation against the dollar are part of the background.
• The shape of money: Debates over digital currencies and monetary sovereignty touch long-running themes that have drawn some investors to physical metal held outside the banking system.

How these forces balance out has varied over time, which is why many holders follow central-bank signals closely.

Key figures this week

Figure	Value
Fed policy rate after September hike	3.75 percent to 4 percent
Fed participants expecting at least one more hike this year	16 of the 18
Fed-cited core PCE inflation, 12-month (August)	3 percent
ECB deposit facility rate	2.25% to 2.50%
ECB-cited euro area headline inflation (September)	3.8 per cent
Treasury shadow fleet vessels sanctioned	17

Sources

The official releases covered this week:

• Philip R. Lane: Diagnostic Challenges for ECB Monetary Policy (European Central Bank, October 5, 2026)
• Philip R. Lane: Interview with Ansa (European Central Bank, October 6, 2026)
• Piero Cipollone: Money in the digital age: digital euro, tokenisation and the role of central banks (European Central Bank, October 6, 2026)
• Results of the September 2026 survey on credit terms and conditions in euro-denominated securities financing and OTC derivatives markets (SESFOD) (European Central Bank, October 7, 2026)
• Waller, The Signaling Value of the Summary of Economic Projections (Federal Reserve, October 8, 2026)
• Meeting of 9-10 September 2026 (European Central Bank, October 8, 2026)
• Operation Economic Outcast Neutralizes Iranian Regime’s Remaining Shadow Fleet Network (U.S. Department of the Treasury, October 8, 2026)
• Federal Reserve Board releases results of the 2025 Survey of Consumer Finances, which provides the public and policymakers with detailed insights into the economic condition of American families (Federal Reserve, October 9, 2026)

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