(Corrects Paragraph 9 to indicate spread rose over 220bps earlier in the week, and not on Tuesday.

By Yoruk Bahceli

(Reuters] – The markets increased their betting on the European Central Bank’s (ECB) interest rates rises Wednesday. They priced in 75 basis points (bps), of increases by September.

The bank is widely expected to begin increases in July, and then move in increments of 25-bp. This pricing suggests that traders expect the bank to increase its prices by a rare 50-bp rate at one meeting in September. That’s a change from Friday’s October timing.

Thursday will see the next policy-setting meeting at the ECB.

After the release of a stronger-than-expected Euro area inflation report, traders have been steadily increasing their wagers on ECB increases. This was in response to the need for more aggressive moves by the central bank. Many policymakers indicated that they would be open to an increase of 50 basis points.

“It seemed obvious that 50-basis point hike bets would grow in popularity given the ECB’s widely-perceived behind-the-curve perception and that other central banks have begun to move in 50 basis-point increments also,” said Antoine Bouvet senior rates strategist, ING. Bouvet refers to the Reserve Bank of Australia. In a surprise move that was hawkish, the Australian central bank increased interest rates by 50 basis points on Tuesday.

“The important question is tomorrow’s whether the ECB can meet hawkish expectations. Bouvet stated that the April meeting proved to be a puzzle for markets, with the rhetoric not matching market expectations.

The bond yields in the wider market continued to climb on Wednesday, but they remained slightly lower than multi-year peak levels reached on Tuesday.

At 0743 GMT Germany’s benchmark 10-year yield for the euro zone, Germany’s Germany, had increased 3 basis points to 1.31%. It was previously at 1.343% on Tuesday.

After rising to 3.55% Tuesday, Italy’s yield on 10-year bonds was 5. bps higher at 3.45%. This week, the closely monitored risk premium for 10-year Italian debt was 213bps. It had been more than 220bps earlier in this week.

Germany and Portugal will auction 10-year bonds on Wednesday in the primary market.