Money markets price in over 50% chance of 50 bps July ECB hike
Euro zone money markets ramped up their bets on a 50 basis-point rate hike from the European Central Bank in July on Friday, that would bring the bank’s policy rate to 0%.
Dutch central bank governor and ECB policymaker Klaas Knot said earlier this week the bank should keep the door open to a 50 bps hike if upcoming data suggests inflation is “broadening further or accumulating”.
That pushed money markets to increase their bets on such a move and on Friday, money markets priced in 38 bps of hikes by July ECBWATCH.
This suggests a 25 bps hike is fully priced in, and markets attach a roughly 52% probability of an additional 25 bps move.
Source: Reuters (Reporting by Yoruk Bahceli; editing by Dhara Ranasinghe)