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Markets price in 35 percent chance of ECB rate hike by year-end
March 31, 2017 / 10:48 AM / in 9 months

Markets price in 35 percent chance of ECB rate hike by year-end

LONDON, March 31 (Reuters) - Money market expectations for an interest rate rise at the European Central Bank’s December meeting fell further on Friday following softer-than-expected inflation numbers.

Forward Eonia bank-to-bank rates dated for the ECB meeting on December 14 stood at around minus 0.3202 percent, about 3.5 basis points above the Eonia spot rate of minus 0.3570 percent.

This gap suggests markets are pricing in roughly a 35 percent chance of a rate hike by year-end. That is down from around 50 percent on Thursday and 70 percent earlier this week.

Forward Eonia rates no longer fully price in a rate rise by March next year, with the chances of a move then seen at around 60 percent. (Reporting by Dhara Ranasinghe; Editing by John Geddie)

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