ECB Chief Economist Hints at Possible Further Rate Hikes

Philip Lane, the chief economist of the European Central Bank (ECB), has indicated that the bank may raise its key interest rates again, even as positive geopolitical developments help lower energy prices. Speaking after the ECB's latest decision, Lane stressed that any future moves would depend on incoming economic data.

Last week, the ECB raised all three main interest rates by 25 basis points, bringing the deposit rate to 2.25% per annum. At the same time, the central bank revised its eurozone inflation forecast for the current year upward to 3% from the previously anticipated 2.6%, reflecting persistent price pressures.

The rate decision came before news that the United States and Iran had reached an understanding that could end hostilities in the Middle East and restore shipping through the Strait of Hormuz. Although energy prices have fallen since the announcement, Lane noted they have not yet returned to pre-conflict levels.

"A decision on further rate increases or maintaining them at the current level will depend on incoming data," Lane said, leaving the door open for additional tightening if inflation remains stubbornly high. The ECB's stance underscores its cautious approach amid a complex mix of declining energy costs but still-elevated inflation forecasts.