European Rate Hike Predictions Split Traders and Central Bankers

Traders and central bankers in Europe are increasingly at odds over the outlook for interest-rate hikes, according to Bloomberg. As energy prices surge, money markets have turned more hawkish, now implying four quarter-point rate rises from the European Central Bank (ECB) over the next 12 months, and five such increases from the Bank of England.

This shift in market expectations stands in contrast to the recent tone of policymakers. The ECB last week reiterated its stance that it won't pre-commit to further steps after raising rates for a second time since the Iran war started. At that point, officials saw wagers on three hikes as too aggressive.