The estimated probability of an ECB rate hike of 75 bps increases | Photo credits: Istock
PARIS, Sept 1 (Reuters) – Eurozone money markets on Thursday priced nearly an 80% chance of a 75 basis point rate hike by the European Central Bank (ECB) next week following the new record set by inflation.
Eurostat announced on Wednesday a greater than expected acceleration in consumer prices in the euro zone, to 9.1% over one year in August.
The markets then revised their expectations of monetary tightening by the ECB upwards; they included, the day before this statistic, a 50% probability of a three-quarter point hike.
This revision in expectations is leading to a significant rise in government bond yields in the region.
That of the ten-year Italian construction industry exceeded the 4% threshold for the first time since mid-June. It is now moving around 3.954% around 09:30 GMT, up eight basis points.
This move helped widen the gap with the German Bund yield of the same maturity to 243.20, its highest since July 29th.
“European inflation data this week showed that price pressures remain strong in the eurozone,” analysts at Mizuho said.
“The outcome of the ECB meeting is still very uncertain but the statistics will probably be enough to tip even centrist Council members towards a 75 basis point rate hike,” they added. (Tommy Reggiori Wilkes report, French version Laetitia Volga, edited by Tangi Salaün)