ECB inflation estimate raises prospect of earlier rate rise

The Financial Times recently reported that the European Central Bank expects to hit its elusive 2 per cent inflation target by 2025, according to unpublished internal models that suggest it is on course to raise interest rates in just over two years.

key notes

  • Unpublished ECB inflation estimate raises the prospect of an earlier rate rise.
  • The internal model suggests eurozone interest rates could go up in two years, closing the gap with a forecast move by Fed.
  • European central bank expects to hit its elusive 2 per cent inflation target by 2025.

EUR/USD bid

The euro has found demand on the news in recent trade, thwarting the bear’s attempts of a lower low before the close of the day in New York:

FX

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