ECB’s Šimkus: Next ECB Move Could Equally Well Be Hike or Cut

27 January 2026

By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Gediminas Šimkus on Tuesday signaled that policymakers could move rates in either direction when they next adjusted policy, but that he expected the ECB to keep borrowing costs unchanged at its meeting in the coming week.

Šimkus, who heads the Bank of Lithuania, told Reuters that policy was appropriate for now and that the economy had adapted relatively well to recent volatility, but warned that fresh shocks could quickly unsettle the ECB’s “good place” of inflation at target, growth around potential, and rates at neutral.

Beyond the near term, he argued against assuming the next step will be easing, saying, “I fully believe there is an equal chance that our next move, whenever it comes, is either an increase or a cut in rates.”

Guidance further out should remain limited, he suggested. “The lesson of the past is that we cannot commit to any policy path or to a promise,” Šimkus said.

Rather than reacting to every data wobble, he urged a focus on underlying dynamics. “The key is not overreacting to every single change in data. We need to spot trends and the major forces shaping the economy,” he said.

Security risks to the EU’s east also argue for preparedness, he said, including ensuring that cash distribution and payment systems can withstand severe disruptions. “It’s obvious that if you face enhanced military risk, cash is something that people might be striving for, and you need to be very efficient,” Šimkus said.