Dutch International Group strategists expect that the Federal Reserve and the European Central Bank will each raise interest rates by 25 basis points in December. Policymakers aim to prevent rising energy prices from spreading to a wider range of inflation. A team of strategists led by Carsten Brzeski wrote in a Friday research report that the two central banks are facing “a supply-side shock caused by soaring energy prices, and the impact of this shock on the overall economy is still limited.” They predict that the ECB will implement a “defensive rate hike”, raising interest rates to 2.75%; the Federal Reserve will raise interest rates to 4.25%, and the Bank of America will focus more on the goal of pulling inflation back to 2%.

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