The European Central Bank's data-dependent approach has shifted trader consensus toward a high probability of at least one rate hike in 2026, as revised staff projections show headline inflation averaging 2.6 percent this year—well above the 2 percent target—due to sustained energy price increases from the ongoing Middle East conflict. After holding the deposit facility rate steady at 2 percent following the April 30 meeting, Governing Council members have signaled that incoming data through the June 11 decision will determine whether tightening begins, with several officials describing a June move as increasingly likely amid upside inflation risks and subdued growth. This environment leaves little room for further easing and has aligned market pricing with the expectation of measured policy normalization before year-end.