Traders are betting the European Central Bank will raise rates above zero this year for the first time since 2012, after a string of hawkish comments from policy makers spurred speculation the bank is priming the market for faster-than-expected monetary tightening.
Money markets are pricing 75 basis points of interest-rate hikes by the ECB’s December decision, according to swap contracts linked to the euro short-term rate. That’s up from less than one quarter-point increase expected at the start of the year. The ECB’s deposit rate is currently at a record low of minus 0.5%.
