Preview: ECB expected to keep rates at 2% today. Lagarde tone on June takes centre stage

The ECB is expected to hold its deposit rate at 2% today, with markets pricing only a ~10% chance of an immediate hike. Investors are focused on President Lagarde’s press conference for signals about a likely June move, with market pricing implying 20–40bp of tightening by then and BNP Paribas tipping a 25bp hike as most probable. Weak Eurozone activity (composite PMI 48.6) and tighter bank credit contrast with sticky inflation—ECB staff project 2026 headline inflation at 2.6% and GDP growth at 0.9%—creating a stagflationary dilemma. Analysts flag that a hawkish tone could lift EURUSD ≈0.20%, while a neutral or ambiguous stance could push it down ≈0.30%. Broader drivers like oil and risk sentiment still weigh on the pair.