Traders Flip to Bet on ECB Hike as Inflation Upends Rate View
- Volatile rate bets are a sign of the uncertainty among traders
- The ECB now expects inflation to stay above 3% next year
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In a span of days, the market has completely changed its view what the European Central Bank is likely to do on Thursday, highlighting just how much uncertainty surrounds the decision.
Money markets are now pricing in a 68% chance the ECB raises interest rates by a quarter of a percentage point. The view has changed rapidly in recent weeks as evidence builds that Europe is facing persistent inflation that’s been made worse by soaring energy prices.