ECB’s April Rate Hike Still an Option as Core Inflation Persists

ECB Governing Council member Joachim Nagel said an April rate hike “certainly remains an option,” keeping markets focused on the next ECB meeting. The latest guidance reinforces that any April rate hike decision is highly data-dependent because inflation progress looks incomplete—especially in core and services components. Key inputs now driving the ECB’s April rate hike outlook: February headline inflation at 2.8% YoY, core inflation at 3.1%, and negotiated wage growth of 4.5% in Q4 2024. Economic growth is still modest, with Q1 2025 GDP estimated around +0.3%. Market pricing has shifted higher: traders see about a 65% probability of a 25bp April increase. They still expect uncertainty until March inflation prints and upcoming wage settlements. Nagel’s stance is more hawkish than some colleagues, while ECB President Lagarde reiterated the data-dependent framework. With the tightening cycle started in July 2022 (450bp cumulative so far) and the deposit facility rate at 3.75%, the ECB signals “higher for longer” until wage- and energy-linked momentum cools. Crypto traders: an April rate hike expectation typically tightens euro funding and reinforces risk-off sentiment, which can pressure crypto liquidity and raise volatility into the policy date. Watch bond yields and EUR strength as near-term sentiment gauges.