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Bond markets split on how high the ECB’s next rate hike could go

Investors are also weighing how Middle East events could feed into energy prices and inflation, shaping expectations for the ECB’s eventual peak rate.

Reported · Written up by our desk · Central Banks

MarketWatch reports that nearly all observers expect the European Central Bank to raise rates, but bond markets are divided on where the tightening cycle may ultimately stop.

The outlet says the key uncertainty is the so-called terminal rate, with different parts of the bond market signaling different views on how high ECB policy might go.

MarketWatch also points to the risk from Middle East developments, noting that any impact on energy prices could alter the inflation outlook and therefore expectations for what comes next from the ECB.

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