ECB Policy Rate’s Future Path Is a Mystery Confounding Traders
- Market may still be uncertain about neutral rate level: BofA
- Money markets bet ECB will barely ease policy in four years
The European Central Bank headquarters in Frankfurt, Germany.
Photographer: Thomas Lohnes/Getty Images
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The European Central Bank is puzzling traders who are at a complete loss over the path of policy rates.
Markets are already bracing for rate cuts from the Federal Reserve and Bank of England by 2024, following bets that borrowing costs will peak at 3.25% in the U.S. and almost 2.5% in the U.K. in a year. Meanwhile they see euro-area policy makers barely easing policy even four years from now.