125
In the last week, the hypothesis of a jumbo rate hike, or 75 basis points, by the ECB in the next meeting on 8 September has become increasingly concrete. A Fed-style move aimed at countering rising inflation (+ 9.1% in August in the euro area). There are those who go further like Citigroup which hypothesizes two consecutive increases of 75 basis points each.
A quick (but potentially short) rate squeeze is a compelling baseline, according to Antoine Gaveau, Citi’s bond strategist. “The hawks have won pretty much every argument in recent months,” adds Gaveau.
The latest Bloomberg survey also predicts a 75bp hike next week, as money markets are betting on a total of 125bp of hikes in the next two meetings.