A member of the European Central Bank's Governing Council has delivered one of the most hawkish policy signals this year, indicating that a rate hike in June may mark the beginning, rather than the end, of the current tightening cycle.

According to reports, Governing Council member Gediminas Simkus stated that a June rate increase by the ECB is "almost certain," and it is "very likely" that further borrowing cost hikes will be needed thereafter. This stance is notably more assertive than that of most other Council members, who, while generally supporting a June hike, have largely remained vague and cautious regarding the subsequent path.

Simkus explicitly said that "the probability of a second hike is higher than that of no hike," though he acknowledged the specific timing—whether in July, September, or October—remains uncertain. This statement effectively transforms market expectations of "at least one more hike within the year" into a more formal policy inclination.

His position aligns closely with current market pricing. Traders have already almost fully priced in expectations for two ECB rate hikes this year. Against this backdrop, Simkus's remarks undoubtedly further reinforce market judgments that the ECB will continue to maintain a tightening stance.

Acting Early to Curb Inflation, Without Excessive Worry About Tightening Impact Simkus noted that while comprehensive hard inflation data is still lacking, market indicators and survey data consistently point to "a more inflationary environment." In his view, recent inflation figures are not sufficient to show significant improvement, nor do they weaken the necessity for a June rate hike.

Explaining the rationale for raising rates, Simkus defined "prudence" as acting early—by hiking rates at the current stage to curb inflationary pressures promptly, prevent the spread of second-round effects, and break any potential wage-price spiral that may form.

Regarding concerns that monetary tightening could weigh on the economy, Simkus remained relatively calm. He suggested there is no need to overstate the direct impact of a single 25-basis-point hike, or even a cumulative 50-basis-point tightening over the year, on the economy, implying that the current tightening intensity remains within an economically manageable range.

When discussing the ECB's upcoming new quarterly economic projections, Simkus pointed out that recent economic data and survey results overall show characteristics of "slightly higher inflation and slightly weaker growth." This suggests the ECB may raise its future inflation path forecasts while slightly lowering its growth expectations.