ECB’s DeMarco suggests two rate hikes if inflation risks grow

ECB’s DeMarco has signaled that two rate hikes could be justified if risks intensify, taking a hawkish stance on inflation. The probability of a 50+ bps decrease at the April 2026 ECB meeting is 0.1¢ YES.

Market reaction

DeMarco’s remarks come as the Middle East conflict affects energy prices, which could push euro area inflation higher. The April 2026 rate decrease market is effectively flat, with no change in trader sentiment. Odds reflect a clear expectation that rate cuts are off the table.

Why it matters

Trading activity is thin: just $2 in USDC has actually been exchanged. The order book is similarly shallow, with only $36 needed to move the price 5 percentage points. The market is not pricing in any significant ECB policy shift at this meeting.

What to watch

For traders, DeMarco’s comments are likely noise unless further concrete actions or statements follow. Buying YES at 0.1¢ is a long shot unless inflation data dramatically underperforms. Watch for ECB President Christine Lagarde’s upcoming press conference and any revisions to inflation forecasts. Concrete policy signals or geopolitical shifts could move these odds.

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