Barclays has delayed its forecast for European Central Bank (ECB) rate hikes. The new timeline now points to June and September 2026, shifting from earlier April and June targets. Traders on Polymarket are pricing in a 74% probability of an ECB rate hike occurring in 2026, with a 38-40% chance specifically for a June increase.
Market reactions show a near-zero expectation for a significant rate cut at the upcoming April meeting. Eurozone inflation climbed to 2.6% in March, up from 1.9% in February. The ECB recently maintained its deposit facility rate at 2%.
Analysts note that rising energy prices, influenced by geopolitical tensions between Iran and Israel, are contributing to inflation pressures. This hawkish stance from the ECB, coupled with the hold on the deposit rate, supports the expectation of delayed policy easing. Traders anticipate no immediate rate cuts, with tightening actions more likely later in the year.
Watching ECB communications, particularly statements from President Christine Lagarde regarding inflation forecasts, will be crucial for anticipating any policy shifts.