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Essentials of Monetary Policy

European Central Bank: When, Not If

April 30, 2026
Mirza Shaheryar Baig
Foreign Exchange Strategist

According to the European Central Bank (ECB)

  • The ECB held rates unchanged as expected.
  • European policymakers are in a tough situation marked by weak initial conditions and a far greater exposure to energy supply disruption than North America.
  • Policymakers heavily conditioned the rate path on the duration of the energy price shock and its spillover on core inflation.

Comments

The ECB held rates steady as expected, acknowledging that upside risks to inflation and downside risks to growth have intensified. But policymakers were ambiguous on the timing of rate hikes.

The statement kept all policy options formally open. In reality, this signals uncertainty over the timing of future tightening—rather than the direction of policy, which is clearly skewed towards rate hikes.

Governor Lagarde avoided commenting on whether the ECB will hike in June, which is almost fully priced by the market. We continue to expect two rate hikes this year.

2026 Schedule of Central Bank Meetings

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