February 28, 2020 / 9:41 AM / a month ago

Investors see ECB rate cut by June as coronavirus fears grip markets

FILE PHOTO: The European Central Bank (ECB) logo is pictured before a news conference on the outcome of the meeting of the Governing Council in Frankfurt, Germany, January 23, 2020. REUTERS/Ralph Orlowski

LONDON (Reuters) - Investors ramped up expectations for a euro zone rate cut as soon as June on Friday, as fears that coronavirus could tip the world economy into recession gripped world markets.

Eonia money market futures dated for the European Central Bank’s June meeting show that a 10 basis point rate cut is now fully priced in. As recently as Tuesday, markets had priced in 4 bps worth of cuts or roughly a 40% chance of rate cut by June.

But rate-cut expectations both in the euro zone and Unites States have shot up in recent days, reflecting heightened fears about the impact of coronavirus on the economy.

Reporting by Dhara Ranasinghe; Editing by Tommy Reggiori Wilkes

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