A Reuters report is saying that ECB policymakers will discuss whether to raise interest rates by 25 bps or 50 bps on Thursday as they seek to tame inflation, citing two sources with direct knowledge of the matter. The sources also add that policymakers were homing in on a deal to provide bond market assistance to countries like Italy if they stick to European Commission rules on reforms and budget discipline.
The latter is leaning more towards the tool to deal with fragmentation risks and I would argue that we might get a soft announcement on that this week. In any case, the euro has jumped alongside European bond yields with EUR/USD now up 0.8% to 1.0220 with GBP/USD also climbing up to 1.2000 currently.
