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Euro firm as markets price in ECB deposit rate hikeForex Mar 17, 2017 06:43AM ETInvesting.com – The firm as euro-zone money markets price in possible hike in the ECB’s deposit rate.
Euro firm as markets price in ECB deposit rate hikeRelated Articles
The ECB’s deposit rate currently stands at minus -0.4% and its key lending rate at 0.0%.
ECB member Ewald Nowotny said bank to decide later on possible deposit rate hike before or after end of its QE program.
Forward Eonia rates indicate an 80% chance of a hike in the deposit rate of about 10 basis points at ECB December policy meeting.
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The exchange rate reached highs of €1.15302, after Kristin Forbes voted to immediately raise interest rates.
Gains were capped after Ewald Nowotny revealed that the ECB could raise the deposit rate before its main refinancing rate.
Investors ratchet up expectations for ECB rate rise in December
The ECB’s deposit rate is currently minus 0.40 percent.
Forward Eonia bank-to-bank rates dated for the ECB meeting on December 14 stood at around minus 0.27 percent, some 8 basis points above the Eonia spot rate of minus 0.35 percent.
Money market rates show a 90 percent chance of a hike in January, and are fully priced for a rise in March.
Rising expectations of a rate hike at the end of this year followed comments from ECB policymaker Ewald Nowotny, who said the central bank will decide at a later time whether to raise interest rates before or after ending its bond purchase program.
LONDON Euro zone money markets on Friday showed around an 80 percent chance that the European Central Bank could lift its deposit rate at its December meeting, up from 60 percent a week ago.