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A half-point increase in the ECB in September already priced in


RATE-A rise of half a point by the ECB in September already integrated |  Photo credits: Istock

RATE-A rise of half a point by the ECB in September already integrated | Photo credits: Istock

LONDON, Aug 10 (Reuters) – Investors in the euro zone now believe a further half-point rate hike from the European Central Bank will be certain next month, Refinitiv data showed on Wednesday.

The region’s money markets are pricing in a 100% probability of a 50 basis point hike in key ECB rates in September. This estimated probability was 95% on Tuesday and only around 50% last week.

The ECB has already raised its three key rates by 50 points on July 21, a more marked tightening than previously mentioned by its leaders, in the face of the acceleration of inflation.

“The ECB will certainly try to act as quickly as possible,” comments Ben Laidler, market strategist at eToro. “I think it’s justified given how late she was to take action.”

The rate hike decided on July 21 by the Board of Governors, the first in 11 years, came well after the start of policy tightening by several other major central banks, including the US Federal Reserve and the Bank of England. .

Market participants also upgraded the estimated likelihood of a third three-quarter point Fed rate hike next month, after July’s better-than-expected U.S. job creation figure was released. last Friday.

This change in key rate expectations did not prevent benchmark bond yields from falling on Wednesday: that of the ten-year German Bund fell by around two basis points to 0.902% around 08:30 GMT, four hours before publication. eagerly awaited from the latest inflation figures in the United States.

(Samuel Indyk report, French version Marc Angrand, edited by Jean-Michel Bélot)





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