What to expect from the upcoming ECB meeting?
28 APR, 2026
By Joanna Piwko from RankiaPro Europe
The ECB heads into its next meeting facing a tricky trade-off between rising inflation – driven largely by energy – and a slowing euro area economy. While most expect rates to remain unchanged for now, uncertainty around inflation persistence keeps the outlook finely balanced and leaves the door open to future policy moves.
On hold, but with less comfort
Josefina Rodriguez, Economist at Vanguard
We expect the ECB to keep interest rates at 2% at Thursday’s meeting. Although higher energy prices will push headline inflation up in the short term, the loss of growth momentum and the high uncertainty surrounding inflation persistence argue against an immediate policy response. In this context, the Governing Council is likely to emphasize caution and flexibility, maintaining a data-dependent approach while waiting for clearer signals (...). Although we still expect rates to remain stable through 2026, the ECB’s stance is becoming increasingly delicate.
Energy prices have eased, but conditions remain tight: energy markets have calmed since mid-March (...). However, prices remain clearly above pre-conflict levels and futures curves have shifted upward. Persistent supply constraints suggest that energy will continue to push inflation higher (...).
Inflation risks are back in focus: headline inflation rose to 2.6% in March and is likely to accelerate further in April, reaching around 3.1%, mainly driven by energy. Core inflation will likely rise only moderately, although early survey signals point to increasing price pressures (...). Reflecting the energy shock, we have revised up our 2026 CPI forecast (...). Overall, inflation risks remain tilted to the upside.
Activity weakens as higher prices take a toll: recent indicators suggest the euro area economy is losing momentum. Activity surveys have worsened across sectors (...). We have reduced our 2026 GDP growth forecast to 0.8%, with most of the deterioration explained by higher energy prices (...).
The scenario sits between the ECB’s baseline and adverse cases: compared with the ECB’s March projections, growth appears weaker and inflationary pressures somewhat stronger (...). This reinforces the case for patience while keeping all options open.
Monetary policy message: patience with vigilance. Recent communications from ECB officials suggest little willingness to act immediately. We expect the Governing Council to reiterate that the current stance is appropriate for now, while stressing that upside inflation risks require close monitoring (...).
The press conference will likely reinforce continuity: President Lagarde is expected to emphasize that the ECB can look through a temporary energy shock but must act if inflation proves persistent (...). No firm signals about future policy moves are expected.
Our view: we continue to expect the ECB’s deposit rate to remain at 2% throughout 2026. The ECB should, for now, look through the current shock (...). Nevertheless, the policy stance is becoming increasingly delicate, with risks tilted toward further tightening if energy prices remain elevated or inflation proves persistent.
ECB meeting preview: no reason for a hike in April
Karsten Junius, Chief Economist at J. Safra Sarasin Sustainable AM
The ECB has made it clear it “will not be paralyzed by doubt” in responding to the energy price shock, but also that it wants “sufficient information on its magnitude and persistence.” Given the negative impact of the war on the real economy and stable inflation expectations, we see no justification for a rate hike at the April 30 meeting (...). However, rising inflation in coming months will require some response, and we still expect hikes in June and September.
Economic data reflecting the war in Iran are limited (...). March inflation rose to 2.6% from 1.9%, driven by energy, while the ECB expects around 3.1% in Q2, which may be too high (...).
Inflation expectations have returned close to pre-war levels, with no evidence of “non-linear” effects that would justify an immediate response (...).
Survey data (ZEW, PMI, consumer confidence) point to a sharp deterioration in the economic environment (...), though they may lag recent, somewhat more positive developments.
Overall, the situation appears closer to the ECB’s baseline than its adverse scenario (...). While escalation risks remain, severe scenarios now seem less likely.
As a result, the June decision will likely be between holding rates or raising them by 25 bps (...). In our view, Lagarde’s recent remarks make some response to an inflation overshoot almost inevitable, making a June hike likely.
We also expect another hike in September, though its necessity is less clear (...). Weak economic data and labor market deterioration are likely, making strong wage growth or second-round effects unlikely.
Given the weaker outlook, we even foresee a rate cut in the second half of 2027 (...).
An ECB rate hike may not be far off
Felix Feather, economist at Aberdeen Investments
Unless the preliminary CPI data, to be released on Thursday morning, deliver a very significant upside surprise, the European Central Bank (ECB) will keep rates unchanged this week.
However, President Christine Lagarde could use her press conference to lay the groundwork for rate hikes to begin as early as June.
We expect the ECB to keep its options open as it assesses the macroeconomic impact of the current energy crisis. In particular, policymakers are looking for more data to evaluate the severity of the crisis—that is, the scale and duration of supply chain disruptions and how they affect (...).
There are solid reasons to believe that companies will have less ability to pass rising costs on to consumers than in 2022, when pent-up demand was being released and labor markets were experiencing unprecedented shortages.
Nevertheless, the ECB is determined not to repeat the mistakes of the recent past, which means that a rate hike may not be far off.
A hawkish ECB tone already seems priced in
Neuberger experts
For European bond markets and the ECB, a key question is the duration and severity of the current energy crisis and whether it will have a greater impact on inflation or economic activity. ECB members may be torn between avoiding a delayed response to rising prices (as in 2022) or waiting to see if second-round effects emerge (...). So far, investors seem to view inflation as the main risk, which has led to risk aversion in markets. This has shaped expectations, with markets pricing in two ECB rate hikes before the end of July, assuming no near-term resolution to the crisis.
We believe the central bank will wait before acting while the situation in the Middle East unfolds (...). In our view, European inflation could peak around 3.5% over the summer before moving back toward the 2% target in a relatively weak economic environment, with low confidence, slow consumption, and a softer labor market. This would likely remove the need for rate hikes, creating a potential opportunity to extend duration in portfolios.
Are the expected rate hikes really justified?
ECB swaps reflect significant hikes (...)
…But growth forecasts may be too optimistic
Shifts in country fundamentals are creating new relative opportunities
As the effects of the Middle East crisis intensify, differences in fundamentals are becoming more relevant (...). In Europe, peripheral markets like Spain and Italy have historically shown high volatility due to fiscal weakness. However, reforms—contrasting with persistent issues in core markets like France and Germany—have led to a more moderate response to the crisis.
Comparing U.S. and European rate markets, a common theme emerges: markets may be underestimating how much high oil prices could slow growth and, in turn, inflation (...). From a policy perspective, the Fed must balance its dual mandate of employment and inflation, while the ECB focuses solely on inflation, leading to a more restrictive stance in Europe.
PIMCO: ECB in watchful waiting mode
By Konstantin Veit, Portfolio Manager at PIMCO
We expect the ECB to keep rates unchanged at the April meeting, with the Governing Council maintaining a vigilant stance in an environment of exceptionally high uncertainty. Given the elevated risks to both growth and inflation, policymakers are likely to wait for the next set of ECB staff projections in June before making any changes to monetary policy (...).
The recent rise in energy prices has pushed headline inflation higher, but underlying inflationary pressures remain broadly consistent with the ECB’s medium-term target, while wage dynamics are showing early signs of moderation (...). However, compared with the pre-2022 period, the bar for the ECB to “look through” above-target inflation appears higher, reflecting tighter initial conditions and a more cautious, data-dependent approach.
At this stage, we continue to expect vigilance rather than concrete action. If the ECB were to respond to inflation risks, any move would likely be measured rather than aggressive, and more than two rate hikes appear unlikely (...). Such an adjustment would mainly aim to anchor inflation expectations rather than react mechanically to short-term volatility, especially as growth momentum continues to weaken.
