ECB chief economist says another rate hike remains possible if data justify it

The European Central Bank has not ruled out another interest-rate increase after its June 11 move to 2.25%, with chief economist Philip Lane saying further action remains possible if incoming data justify it.

Lane’s comments keep the ECB’s next step open after the bank raised its main rate from 2% to 2.25%, its first hike since 2023. He said policy would remain dependent on data rather than on any preset path, underscoring that officials are still weighing how inflation and energy prices evolve.

What Lane said

On June 16, Lane said the ECB could raise rates again and that whether it does more “will be dependent on incoming data.” He also said the central bank has not ruled out staying at the new level after the June 11 increase.

Lane added that energy prices have fallen since the recent U.S.-Iran interim peace deal, but not back to prewar levels. That leaves the inflation outlook uncertain if energy markets turn higher again or if broader price pressure proves more persistent.

Why the ECB tightened

The June 11 move was the ECB’s first rate hike since 2023. Officials linked the decision to inflation pressures tied to the war in the Middle East and to higher energy prices.

The bank’s stance has been explicitly data-dependent, and recent comments suggest policymakers are still assessing whether the latest energy shock will fade quickly enough to avoid further tightening. Lane’s remarks did not commit the ECB to another increase, but they did keep that option on the table.

How the message evolved

Lane had already been leaning more hawkish in late May. On May 26, he told Nikkei that the ECB’s most benign scenario, in which it could ignore a temporary spike in energy prices, was becoming less likely the longer the Gulf conflict continued.

Reporting at the time said Lane expected the ECB to revise its inflation view higher. That earlier signal matters because it shows the June 16 comments were not a sharp reversal, but part of a sequence in which the inflation backdrop was deteriorating.

What it means for policy and markets

Another hike would affect borrowing costs across the euro area, including for households, companies and governments that borrow at variable or market-linked rates. It would also feed into bond pricing, euro moves and broader expectations for ECB policy.

For now, the main question is whether energy prices and inflation keep easing enough to stop the ECB from tightening further later this year. If they do not, the bank’s latest move may prove to be only a pause in a still-active tightening cycle.

Market expectations had already leaned toward more tightening in 2026 before the June meeting, and Lane’s remarks do not challenge that view. Instead, they reinforce the ECB’s message that the path ahead will be set by incoming inflation and energy data rather than by fixed guidance.