Gediminas Simkus, a European Central Bank Governing Council member and head of Lithuania’s central bank, said on Wednesday during European trading hours that an interest rate rise this year cannot be ruled out.
He also said he prefers the ECB does not cut interest rates at the policy announcement on 30 April.
Market Reaction And Policy Signal
His remarks had no immediate effect on the euro. At the time of reporting, EUR/USD was flat at about 1.1745.
We are seeing a signal from a key ECB member that a rate hike in 2025 is on the table, even if the market seems unresponsive for now. The upcoming April 30 policy meeting is now a critical focal point for any change in official tone. This suggests the current quiet trading around 1.1745 might be mispricing future risk.
This disconnect between hawkish commentary and a flat market points to an opportunity in volatility. We should consider that implied volatility on EUR options is likely undervalued ahead of the announcement in the coming week. Positioning through options, such as buying straddles or strangles, would allow traders to profit from a significant price move, regardless of the direction.
Looking Back From 2026
Looking back from our 2026 perspective, we know that Eurozone HICP inflation proved sticky, remaining above 2.5% through the second and third quarters of 2025. This persistent inflation was the key factor that ultimately forced the ECB’s hand later that year. Therefore, traders should view this moment as an early opportunity to build a bullish bias on the Euro using long-dated call options.
The ECB did indeed signal a more hawkish stance following its summer meetings in 2025, before delivering a rate hike in the autumn. By that time, EUR/USD had already rallied significantly from these levels. This shows that acting on these early, overlooked comments was the correct strategy for the weeks that followed.
