The European Central Bank is virtually certain to raise interest rates on Thursday, according to market observers, though attention is already shifting to what follows the decision.
While a rate hike is almost universally anticipated, bond markets show dissent over the terminal rate for this tightening cycle — the level at which the ECB is expected to stop raising rates. Wall Street is bracing for the central bank's signals on this point as much as for the hike itself.
A key factor complicating the outlook is the situation in the Middle East. Events there and their impact on energy prices could feed through to inflation, adding a layer of uncertainty to how much further the ECB may need to tighten policy.
Source: MarketWatch
