Traders at Odds with ECB and BOE on Rate Hike Expectations

Traders are increasingly diverging from central bankers on the outlook for interest-rate hikes in Europe. Money markets have turned more hawkish as a surge in energy prices revives concerns about inflation.

The European Central Bank and the Bank of England were not predicting four or five quarter-point rate rises over the next 12 months, respectively, but swaps now imply these increases.

Economists forecast just one or two more hikes from both central banks. In the UK, Deputy Governor Dave Ramsden said he was comfortable with current policy, though he acknowledged there were upside risks.