Traders still expect the ECB to hike rates at the June or July meeting (most see July) but the sting of expected rate hikes is being trimmed back. As of this morning, the market had 5 quarter point hikes prices in over the next year. One has been priced out, implying (at this moment) that the market expects the ECB main refinancing rate to rise to 2.25% from 1.25% now by April 2012…
It is interesting to note that Swiss rates are beginning to creep up in anticipation of a potential hike from the SNB despite the strong CHF. Swiss money markets are notoriously thin, so take the predictive value of these odds with a grain of salt.
