Folks:
This is a summary of what the market view is (and not my own!):
ECB decision to raise interest rates by a quarter point to 2.5% - the second in the last 3 months - was widely expected. However the combination of more hawkish comments by Jean-Claude Trichet (preseident ECB) on interest rates and upwards revisions to forecasts for growth and inflation for the region sparked a widespread sell off in bonds.
The market is pricing in a a greater risk of interest rates rsing to 3.25% by the end of the year. Goldman Sachs revised its ECB forecast saying there would be an increase of 25bp in June and an increase to 3% by year end. Analysts at Capital Economics expect the next upward move to come in May and see rates going to 3.5% by year end.
Most analysts are viewing the tightening path of interest rates as clearly signalled by ECB.
(adapted from FT)
This is a summary of what the market view is (and not my own!):
ECB decision to raise interest rates by a quarter point to 2.5% - the second in the last 3 months - was widely expected. However the combination of more hawkish comments by Jean-Claude Trichet (preseident ECB) on interest rates and upwards revisions to forecasts for growth and inflation for the region sparked a widespread sell off in bonds.
The market is pricing in a a greater risk of interest rates rsing to 3.25% by the end of the year. Goldman Sachs revised its ECB forecast saying there would be an increase of 25bp in June and an increase to 3% by year end. Analysts at Capital Economics expect the next upward move to come in May and see rates going to 3.5% by year end.
Most analysts are viewing the tightening path of interest rates as clearly signalled by ECB.
(adapted from FT)