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Money markets ease up on aggressive ECB rate hike bets -Breaking

by Mike Robinson

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© Reuters. FILE PHOTO – Frankfurt, Germany, January 23rd 2020. REUTERS/Ralph Orlowski

LONDON, (Reuters) – Eurozone money markets reduced their bets about aggressive ECB policy tightening. They are positioning Wednesday for one 10-basis-point rate increase by the end-2022 as opposed to two earlier increases.

Eonia money market futures that date to December 2022 of the European Central Bank see 100% probability for such a change. The market price had indicated that the weekly’s start would see a 10 basis point increase in the July 2022 rate and two rises in October 2022.

Expectations are being lowered in line with a larger recovery of euro zone bond markets. These sold off after Christine Lagarde (ECB chief) disappointed investors last week, not pushing back against more aggressive market pricing of rates rises in the next year.

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