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HomeEconomyDoubts spread over 75bps ECB rate hike this week

Doubts spread over 75bps ECB rate hike this week

(Bloomberg) — Traders believe the ECB will raise rates by 75 basis points at Thursday’s policy meeting It pulled back slightly amid heightened concerns about the region’s economy.

Swap trades linked to ECB meeting show money markets are pricing in 66 bps hikes, lower than most recent hikes About 3 basis points high. This will be the ECB’s first monetary policy meeting since July, when officials raised key interest rates for the first time since 2011.

German data on Tuesday added to concerns as factory orders in Europe’s largest economy fell for a sixth straight month. A deep recession in the euro area could dampen inflation, limiting the need for aggressive policy tightening.

Still, a majority of economists surveyed by Bloomberg expect an upward revision of 75 basis points. Searing inflation has increased bets on a massive move, and Governing Council members have pledged to lift policy above the so-called neutral rate if necessary.

European bonds rose on Tuesday, led by shorter maturities. Two-year German bund yields – the most sensitive to changes in monetary policy – fell about 5 basis points to 1. 08%, about

basis points below the recent peak on September 1.

Read more: ECB’s Kazakhs say broad and protracted recession may slow rate hikes


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