Multiple officials from the European Central Bank have successively issued hawkish signals, increasing the likelihood of an interest rate hike in April. Against the backdrop of the Iran conflict pushing up energy prices and complicating the inflation outlook, a pivotal shift is emerging in the ECB's policy path. Gabriel Makhlouf, a member of the ECB's Governing Council and Governor of the Central Bank of Ireland, stated on Friday that an April rate increase is not impossible if data indicates it is necessary. He simultaneously emphasized that "the next meeting is absolutely a live meeting." Joachim Nagel, President of the Bundesbank, pointed out on the same day that if inflationary pressures build further, the ECB may need to act as early as April. According to Bloomberg, citing informed sources, officials internally already view an April rate hike as a realistic option. Markets have already adjusted their pricing accordingly. Data from London Stock Exchange Group indicates markets are currently pricing in approximately a 50% probability of a rate hike in April, while the probability for a June hike has risen to 80%. JPMorgan Chase, Morgan Stanley, and Barclays all raised their forecasts for the ECB's policy path on Thursday, shifting to expect multiple rate increases within the year.

**Official Stance: Data-Dependent, with Clear Hawkish Lean** Makhlouf's language was cautious in a Bloomberg Television interview, but conveyed a clear signal. He stated that he "fully understands" market bets on two rate hikes this year—which also aligns with the ECB's baseline scenario—but stressed that policy-making would remain calm and prudent. "If the facts suggest that we have to move, we will absolutely move," he said, "But ultimately, it's data-dependent. We have six weeks until the next decision, which is a long time in the current timeframe of shocks." Makhlouf also noted that there is currently no bias towards tightening in the ECB's policy stance, but that it is paying "particularly close attention" to energy prices and will respond as needed to achieve the 2% price stability target. Nagel's remarks were more direct: "Given the current situation, it is conceivable that the medium-term inflation outlook could worsen and inflation expectations could rise persistently, in which case a more restrictive monetary policy stance would very likely be necessary."

**Institutions Revise Forecasts: Up to Three Hikes in Sight** Facing this shift in policy signals, major Wall Street institutions quickly revised their expectations. According to Reuters, both Barclays and JPMorgan Chase now expect the ECB to raise rates three times this year, by 25 basis points each, in April, June, and July. This would bring the deposit facility rate from the current 2% to 2.75%. Morgan Stanley predicts the ECB will hike rates once in June and once in September, pushing the rate to 2.5%. Previously, the ECB, as expected, left its key interest rates unchanged at 2% on Thursday. However, ECB President Christine Lagarde warned that inflation risks make the outlook "significantly more uncertain." Newly released forecasts show inflation exceeding the 2% target this year, while economic growth is expected to slow. The magnitude of this shift in forecast direction is notable—several institutions previously expected the ECB to hold rates steady through 2026, but have now comprehensively shifted their view.

**Divisions Remain: The Path to Tightening is Not Without Disagreement** Not all voices point towards rate hikes. Former ECB President Jean-Claude Trichet stated in a CNBC interview on Friday that the ECB's approach of assessing the situation meeting-by-meeting is "very wise." He believes Europe has not yet reached a stagflation tipping point, and the current slowdown in growth is "not yet dramatic." UBS economists wrote in a report on Thursday that they expect the ECB to keep rates steady rather than tighten policy, a judgment that "contrasts with market expectations." Market participants have also highlighted the risks of overtightening. Richard Carter, Head of Fixed Interest Research at Quilter Cheviot, pointed out, "Any spike in inflation will naturally weigh on economic growth, so it is crucial that the ECB does not overtighten and maintains its focus on the economic outlook." "This is extremely difficult against such a volatile Middle Eastern backdrop." Ultimately, the duration of the conflict will be a core variable influencing the ECB's decision-making. Until the data becomes clearer, the direction of the April meeting remains undetermined.