According to ING’s Michiel Tukker, the European Central Bank (ECB) is unlikely to raise interest rates in April, despite market expectations that a 25 basis point hike will occur by June, with at least one additional increase anticipated in 2026 [1]. Tukker highlights that recent volatility in oil prices has created significant uncertainty around the ECB’s policy trajectory, as these swings are closely tied to expectations for the ECB, the Federal Reserve, and the Bank of England, making conviction trades more challenging [1].
On Tuesday, ECB President Christine Lagarde and the International Monetary Fund (IMF) both emphasized the risks to growth dynamics in the current environment, which should temper expectations for imminent rate hikes [1]. Lagarde’s focus on data dependency further suggests that April is likely too soon for any policy changes [1]. Despite this, markets have fully priced in a 25 basis point hike by June and anticipate at least one more increase by the end of the year [1].
The article notes that markets remain uncertain about the direction of policy rates, and that upcoming speeches from various central bank officials this week could provide further guidance [1].
CONCLUSION
The ECB is expected to hold rates steady in April, with markets instead anticipating a hike in June amid ongoing oil price volatility. Uncertainty remains high, and forthcoming central bank communications may influence market expectations further.