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ECB Hike of 75 Basis Points by October Is Now Fully Priced In

  • Jumbo rate hike may come as soon as September, pricing shows
  • Some officials want three-quarter point hike to be considered
Updated on

Traders are confronting the prospect of even bigger rate increases from the European Central Bank, as pressure grows on officials to intensify their fight against record inflation in the region.

Money markets priced in 125 basis points of tightening by October, according to interest-rate derivatives linked to ECB meeting dates. That implies a half-point hike and a three-quarter point increase spread over its next two policy decisions. The ECB’s deposit rate is seen by markets as hitting 2.25% next year, the highest since 2008.