LONDON -- Investors are betting the European Central Bank could deliver its first interest rate rise since 2011 by July next year.

Any further tightening, however, is likely to mirror the tentative first steps taken by the U.S. Federal Reserve.

In the space of a fortnight, markets have ratcheted up their expectations for a rate hike in the euro area following comments from the ECB and other major central banks.

Forward Eonia bank-to-bank rates, a closely followed gauge of the market's rate expectations, dated for the ECB meeting next July stand at minus 0.25 per cent, well above the Eonia spot rate of minus 0.36 per cent.

Rounded, that gap implies markets are fully pricing in a 10 basis point hike in the ECB's currently minus 0.40 per cent deposit rate by next July — a move that was not anticipated a month ago.

But over the next two years, between only two to three hikes are expected, leaving rates still in negative territory.

Martin van Vliet, a senior rates strategist at ING, notes that contracts that show where one-month Eonia rates are expected to be in two years' time suggest that three hikes are priced in by mid-2019.

Analysts said another measure derived from Euribor money market futures suggests only two hikes are fully priced into the market by June 2019.

"It is clear the market is pricing in a very sluggish tightening cycle, if you can call it that," said ING's Martin van Vliet. "It's basically what the Fed did in the first two years of the current cycle."

The U.S. Federal Reserve has taken 18 months to raise rates four times to a level still well below historical averages.

Even the rate trajectory mapped out by markets is too aggressive for many analysts given the outlook for subdued inflation and expectations that an unwinding of the ECB's bond-buying scheme is likely to take place before rates change.

HSBC expects the ECB's deposit rate to remain unchanged next year, while ABN AMRO expects the first hike in September 2018.

"I don't think the ECB's going to hike in 2018 at all and even 2019 seems questionable to me," said Peter Schaffrik, global macro strategist at RBC Capital Markets.