TD Securities rate strategists said markets have largely priced in expectations that the European Central Bank will raise interest rates by 25 basis points tonight and reiterate a data-dependent approach, which they said could support a modest rise in euro rates.
According to Jin10, the strategists’ base case is that the ECB will deliver a 25-basis-point hike without making major changes to its statement.
They said the statement is expected to continue acknowledging two-way risks to inflation and growth, while the Governing Council maintains a meeting-by-meeting, data-dependent decision framework.
Under this scenario, TD Securities said the 10-year German government bond yield could fall by 3 basis points.