Gediminas Simkus, the ECB Governing Council member and Governor of the Bank of Lithuania, said a rate hike at the European Central Bank’s June 2026 meeting is the most likely outcome. But when asked about what comes after that, his answer was essentially a shrug.

The timing of a second rate hike, Simkus indicated, is unclear. That kind of ambiguity from a central banker who just weeks ago called a June increase “sufficiently obvious” tells you something about how uncertain the macro picture really is right now.

From 50/50 to hawkish in three months

Back in February, Simkus was firmly on the fence. He publicly stated there was a 50/50 chance that the ECB’s next move could be either a rate hike or a cut.

By April, his tone had hardened slightly, though not enough to pull the trigger. He advised against hiking rates at that month’s meeting, suggesting policymakers needed more data before making any significant adjustments.

Then came May 4, and the calculus changed. Simkus pointed to rising inflation and geopolitical risks tied to the Middle East conflict as the primary catalysts pushing the ECB toward tightening. A June hike, he said, was now the most probable outcome.

The ECB’s slow pivot toward tightening

ECB accounts from December 2025 hinted at a potential shift toward rate hikes after what had been a prolonged stretch of holding rates steady. The expectation at the time was that rates would remain stable through most of 2026, but the door was explicitly left open for tightening if conditions warranted it.

Escalating inflation has been the primary driver, compounded by geopolitical instability from the Middle East conflict, which has introduced supply-side uncertainty into energy prices and trade flows.