Traders are reducing their bets on the European Central Bank raising interest rates, with expectations that the increase before the end of the year will be less than 25 basis points.

Due to the continuous decrease in oil prices reducing the long-term risk of maintaining high inflation, traders are reevaluating the European Central Bank's space for raising interest rates. This is the first time since April that the market no longer fully expects the European Central Bank to raise rates by another 25 basis points before the end of 2026, and to raise the key interest rate to 2.5%. Just two weeks ago, before the European Central Bank raised its deposit rate to 2.25%, the market had fully absorbed this rate hike expectation.