Eurozone money markets show an 80% chance of a Dec ECB rate hike - RTRS

As Reuters reported, the European money markets showed on Friday, increased odds for a deposit rate hike by the European Central Bank (ECB) in Dec to 80%, up from 60% seen a week ago.

Reuters cites ECB governing council member Ewald Nowotny’s hawkish remarks delivered yesterday in the US session, as the key reason behind the rise in the expectations of a rate hike at the end of this year.

Forward Euro OverNight Index Average (Eonia) bank-to-bank rates dated for the ECB meeting on December 14 stood at around minus 0.27%, some 8 basis points above the Eonia spot rate of minus 0.35%.

This gap suggests markets are pricing in about an 80% chance of a 10 basis point hike in the ECB's deposit rate by December, just as the central bank's current bond-buying scheme is scheduled to draw to an end.

The ECB's deposit rate is currently minus 0.40%.