Signs of ECB policy shift: Market rate hike expectations intensify, 2026 becomes a key time window

【Crypto】European Central Bank President Lagarde’s recent speech has attracted widespread market attention. According to analysis by the Financial Times, investors generally expect the ECB to keep the benchmark interest rate at 2% next week, but the real focus has shifted to the central bank’s latest assessment of the economic outlook.

Lagarde revealed this week that policymakers might raise their growth forecasts for the Eurozone again at the upcoming meeting. This is significant—more optimistic growth prospects combined with persistent inflationary pressures are prompting traders to reassess the likelihood of rate hikes by the ECB next year. You can see a noticeable increase in bets on a rate hike in 2026 in the swap markets, and these changes have only appeared in recent weeks.

However, there are subtle nuances. The potential shift in the central bank’s policy stance remains a subject of debate, and since market pricing changes have only recently occurred, traders will be especially attentive to any clues from the ECB about the timing of future rate hikes. George Moran, Eurozone economist at Royal Bank of Canada Capital Markets, believes that it’s unlikely the ECB will actually raise rates in 2026, as the current economic tailwinds may be merely cyclical and not lasting. He emphasizes that the ECB has clearly stated it does not want to overreact to short-term deviations from inflation targets.

So the bottom line is: the market is betting on rate hikes, but the central bank remains cautious, and any adjustments to policy signals are likely to be gradual.