A key market guage of long-term Eurozone inflation expectations rose to its highest level since 2012 at over 2.42% on Wednesday, reported Reuters citing the Eurozone 5-year 5-year forward inflation swap. This swap is a gauge for the market’s inflation expectation for a period that starts five years from now and ends ten years from now.   

As long-term Eurozone inflation expectations depart further from the ECB’s 2.0% target to the upside, this could be a key determinant that pushes the central bank to bring forward the timeline of its monetary tightening plans. Indeed, ECB policymaker Martins Kazaks said on Wednesday that “a rate hike is possible as soon as July”. 

This article was originally published by Fxstreet.com.Read the original article here.


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