European Central Bank policymakers are considering raising interest rates by a bigger-than-expected 50 basis points at their meeting on Thursday to tame record-high inflation, two sources with direct knowledge of the discussion told Reuters.
To cushion the impact of the higher borrowing costs, policymakers are also expected to announce a deal to help indebted countries like Greece and Italy on the bond market.
The deal will require they stick to European Commission rules on reforms and budget discipline, the sources said.
The euro jumped on Tuesday after Reuters first reported that a 50 bp hike was under discussion, while yields on eurozone government bonds also rose, with Germany’s two-year benchmark yielding 1.329%, though Greece’s 10-year benchmark yield peaked in the day 7 bp higher at 3.53% before easing to 3.44%. [Reuters]