Money markets are scrambling to bet that the ECB’s tightening will end by the end of the year, but Danske Bank’s chief strategist sees the possibility that the ECB will stop raising interest rates after September.
Perhaps the European Central Bank realized it might not have a long window to raise rates, the strategist said in an analysis of Thursday’s surprise 50 basis point rate hike, prompting the ECB to raise rates sharply ahead of schedule.
There is even a risk that the ECB will raise rates by another 50 basis points in September before pausing. Swap contracts linked to the date of the ECB meeting showed traders betting on a 47 basis point rate hike by the European Central Bank in September and a cumulative 113 basis points by the end of the year, while expectations for a 25 basis point hike in 2023 have not yet been priced in. middle.