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Yesterday, JP Morgan, for the second time this month raises his forecast for rate hikes this year by the ECB. Now estimated to rise to 3.5% from 3.25%, is 1 point above current rates.
Meanwhile, today the Euribor reaches 3215% (a year ago was in 2393%) Â encouraged by the news yesterday.
Written by Carlos Lopez on March 29, 2006 0 comments
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Concerned about the escalation of prices and strong economic growth, the Fed decided yesterday to raise interest rates to 4.75%, which did not surprise the market. The surprise came when the tone of the comments, and augured that future hikes.
How much more can raise interest rates in the future? in a survey to ascertain the subsequent decision by the Fed, 19/20 dealers were betting on a further rise in rates on May 10.
But the positions were more scattered and beyond: 3 / 20 expecting another rate rise in June, compared with 17/20 who shunned; 13/20 gambled because the ceiling of interest rates is 5.0%, compared to 5 / 20 that it amounted to 5.25-5.5%. Yes, most bet on the level of 5.0%.
As for Europe, yesterday met the data from the German IFO (business confidence) and M3 (money supply, or whatever it is, money in circulation) both of the highest expectations, and may remove fear the ECB to continue with its policy of escalation increases Euribor.
With rate hikes coming all this, analysts discounted a growing possibility that the ECB will raise rates in May to 2.75%, or even next week, instead of waiting for June. The futures market currently reflects a possibility of a 64% chance that the ECB will hike rates in May in a quarter-point, and 100% to do so in June. In addition, the market believes the ECB could tighten monetary policy more than expected, to reach 3.25% in December. A month ago, the market is expected to reach 3%.
Written by Carlos Lopez on March 29, 2006 0 comments
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