ECB Rate Hike Bets Are Losing Out to Still-Dim Inflation Outlook
- Money markets are betting on a rate hike in about three years
- Forward-looking swaps show inflation below 2% target in 2024
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Traders have a ways to go before they close the gap between their lofty rate-hike bets and the muted outlook for inflation in the euro area.
The market is now pricing in a 10-basis-point increase to the European Central Bank’s deposit rate in around three year’s time, just a third of what was expected in May.