Traders pare bets on an ECB October rate rise to below 40%
The pullback comes days after ECB officials flagged both upside inflation risks and limited wage pressure from the energy shock.
Published
Chart: ECB deposit facility rate
Traders are scaling back wagers on another European Central Bank rate increase in October, with pricing now putting the probability below 40%.
The shift follows a run of comments from ECB officials. On Monday, ECB President Christine Lagarde said inflation carries upside risks and growth faces downside risks amid high uncertainty, though she expects economic resilience to continue into the third quarter. She has also said wages show no material response to the energy shock, a sign that second-round effects on inflation remain limited.
On Friday, ECB's Boris Vujcic said the central bank has started a tightening cycle, following two rate increases already delivered this year. Traders are still pricing in several more increases through 2027, even as the odds of an October move slip.
The pullback in October odds reflects growing uncertainty about the inflation outlook rather than confidence that price pressures are fading. Officials have stressed caution and kept the door open to further tightening, so the repricing looks less like a shift toward easier policy and more like traders judging that current data does not yet justify another hike.