John Fahey: Markets bet ECB will hike interest rates to 2.25% by next summer

The ECB also anticipates the eurozone economy will stagnate later this year and into the first quarter next year

ECB president Christine Lagarde: ECB is still far away from the rate it hopes will help bring inflation back to its 2% target

Last week’s European Central Bank meeting provided further evidence that central bankers are very keen to emphasise their resolve and credentials to tackle higher-than-expected and more persistent inflation, by implementing an aggressive front-loading of rate hikes. 

The ECB announced its largest ever rate hike, with an increase of 75 basis points, or 0.75%, in interest rates. This followed a 50 basis point rise at its previous meeting in July, when it ended its negative interest rate policy. The deposit rate will increase from zero to 0.75%, while the refi rate will rise to 1.25%.