Markets See Over 95% Probability of ECB Rate Hike in September

European Central Bank (ECB) Governing Council member Joachim Nagel stated that markets see an over 95% probability of a September rate hike. This prediction was made as the ECB continues to tackle inflation in the Eurozone.

Nagel emphasized the need for Germany to accept a deficit rise for a certain period, citing that current government spending is exceptional. The comment suggests that the ECB may be willing to tolerate some level of fiscal impropriety if it means achieving their inflation target.

The EUR/USD pair reacted negatively to Nagel's comments, falling 0.09% to 1.1580 at the time of writing. This move indicates that markets are pricing in a higher likelihood of a rate hike and are adjusting accordingly.