ECB’s Simkus Flags December Review as Rising Energy Prices Cloud Rate Outlook

European Central Bank (ECB) Governing Council member Gediminas Simkus said on Monday that policymakers cannot rule out action at any upcoming meeting, while describing December as a natural time to assess the economic and inflation outlook more fully. His comments come as surging oil and natural gas prices are creating fresh inflation risks across the euro area.

The remarks have increased attention on the ECB’s next policy moves, particularly as the central bank has already raised interest rates and investors assess whether the latest energy shock could require additional tightening.

ECB Keeps Future Rate Decisions Open

Simkus said the ECB must also examine energy prices before its October meeting. At the same time, he indicated that policy action cannot be ruled out at any meeting, keeping the central bank’s options open as the inflation outlook evolves.

However, the wording does not represent a firm signal that the ECB will raise rates at its next meeting. Market coverage noted that the statement about being unable to exclude action at any meeting is standard ECB language designed to preserve policy flexibility.

The more important signal for markets is the emphasis on December as a key assessment point, particularly if energy prices remain elevated into the final quarter of the year.

Energy Prices Become a Bigger ECB Concern

The ECB’s policy challenge has intensified as the Middle East conflict pushes energy prices higher. Brent crude was trading around the $107–$108 per barrel area on Monday, while European policymakers are also becoming increasingly concerned about natural gas and electricity prices.

Reuters reported that ECB policymakers are increasingly focused on gas prices after December gas futures moved above €83 per megawatt hour, exceeding the ECB’s adverse scenario assumption of €77. The rise in energy costs creates a risk that inflation could remain above the ECB’s 2% target for longer.

This is particularly important because higher energy costs can eventually feed into transportation, food, manufacturing and household expenses. If those pressures become persistent, the ECB could face greater pressure to keep monetary policy restrictive.

ECB Already Raised Rates

The ECB raised its key deposit rate by 25 basis points to 2.50% on September 10, while the main refinancing rate was lifted to 2.65%. The decision reflected continuing concerns about inflation linked partly to higher energy prices.

The latest comments from Simkus therefore suggest that the September hike may not necessarily be the final move if energy-driven inflation becomes more persistent.

What December Could Mean for EUR/USD

For currency traders, the ECB’s evolving rate outlook is increasingly important for the euro. A prolonged period of elevated energy prices could create two opposing forces.

On one side, higher inflation could encourage the ECB to maintain or increase interest rates, potentially supporting the euro through wider interest-rate expectations.

On the other side, expensive energy can weaken household purchasing power and economic growth, creating a negative outlook for the euro. The euro was already under pressure on Monday as the US dollar strengthened amid rising oil prices and expectations of another Federal Reserve rate increase.

This makes the ECB’s October communication and subsequent inflation data particularly important for EUR/USD traders.

Markets Watch October Data Ahead of December

The ECB is likely to remain highly data-dependent as policymakers assess whether the energy shock is temporary or becoming embedded in broader inflation.

Investors will be watching oil and gas prices, eurozone inflation, wage growth, economic activity and consumer demand for clues about the next policy move. Recent comments from other ECB policymakers have also highlighted growing inflation risks from energy markets.

For now, Simkus’ comments reinforce the message that the ECB wants to retain flexibility. If energy prices remain elevated, December could become a crucial checkpoint for determining whether further rate increases are necessary.