Euro Jumps as Traders Pare Wagers on Further ECB Rate Cuts
- Next interest-rate reduction is only fully priced by December
- Bonds extended losses, 10-year yield 6bps higher at 2.57%
The headquarters of the European Central Bank in Frankfurt, Germany.
Photographer: Alex Kraus/BloombergThis article is for subscribers only.
The euro jumped and bonds fell as traders dialed back bets on additional interest rate cuts by the European Central Bank after it delivered a widely-expected reduction on Thursday but raised its inflation forecasts.
The next and only additional reduction for the year is now fully priced by December, compared with October before the decision. As recently as mid-May, three cuts were fully priced through the end of 2024. The ECB said it sees inflation ending this year at 2.5%, compared to 2.3% previously. Its projection for 2025 rose to 2.2% from 2%.