ING’s Michiel Tukker notes that the ECB is unlikely to hike in April, but markets still price a 25bp increase by June and at least one more move in 2026. He highlights that swings in Oil prices are tightly linked to expectations for ECB, Fed and Bank of England policy, complicating conviction trades.

Oil-linked uncertainty for ECB path

"On Tuesday, Lagarde and the IMF emphasised the risks to growth dynamics in the current environment, which all else should temper rate hike expectations."

"The focus from the ECB’s president on data dependency also suggests April might be too early for a change in policy."

"The ECB is clearly not set on raising policy rates this April already, but market expectations remain high for a hike in June."

"Currently, a full 25bp of hikes is priced in by June and at least one more hike by the end of this year."

"Nevertheless, markets continue to guess the direction of policy rates and the many central speakers slated for this week can help."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)