© Reuters. FILE PHOTO: European Central Bank (ECB) headquarters building is seen during sunset in Frankfurt, Germany, January 5, 2022. REUTERS/Kai Pfaffenbach
LONDON (Reuters) – Euro zone money markets were on Thursday pricing in a total of 50 basis points worth of rate hikes from the European Central Bank this year, ratcheting up rate hike bets a day after the Federal Reserve signalled several rate increases ahead.
Money market futures dated to the ECB’s policy meetings showed five, 10 basis point interest rate increases priced in by year-end or a total of 50 bps. That compares with around 44 basis points on Wednesday.
The Fed on Wednesday raised rates for the first time since 2018 and laid out an aggressive plan to push borrowing costs to restrictive levels next year in a pivot from battling the coronavirus pandemic to countering the economic risks posed by excessive inflation and the war in Ukraine.
In early trade, euro area borrowing costs also pushed higher with Germany’s 10-year Bund yield touching 0.408% its highest level since late 2018.
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