European shares inched higher on Thursday, with investors cautious ahead of the European Central Bank’s rate decision where it is likely to raise interest rates for a tenth consecutive time.
Markets are now pricing in a 65% chance of a 25-basis-point hike that could take Europe’s key interest rate to a record peak, up from around a 40% chance on Monday.
Analysts and investors had been leaning towards a pause in the ECB’s rate hike until Reuters reported on Tuesday that the central bank was set to raise its forecast for inflation next year to more than 3%.
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