Investors who are predominantly pessimistic about the European Central Bank (ECB) raising interest rates in the upcoming week might be underestimating the probability of such an occurrence, suggests Klaas Knot, a member of the ECB’s Governing Council. Although the eurozone’s economy is experiencing a deceleration, which is expected to negatively impact demand, the revised inflation projections are unlikely to deviate significantly from the previous round in June.
Markets underestimate potential ECB interest rate hike, posing risks.
