The hike comes after eurozone inflation exceeded expectations in September.
With eurozone inflation last month hitting close to five times the European Central Bank (ECB) target at 9.9%, it was all but guaranteed that it would hike aggressively by 75 basis points (bps) today, doubling the deposit facility rate to 1.5%. In addition, its accompanying statement committed to raising rates further at future meetings given that inflation remains far too high. Where the ECB terminal rate gets to, perhaps a year from now, is still dependent on underlying inflation so guesstimating what that will be is likely a fool’s errand. Markets, for their part at least, are pricing in an almost doubling in rates from here.
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