By Marta Vilar – MADRID (Econostream) – Econostream’s ECB Tone Meter moved further into hawkish territory this week, with both the Governing Council and Executive Board indices penetrating deeper into the slightly hawkish range between +0.5 and +2.5.

The Governing Council index increased to +1.38 from +1.03 last week, while the Executive Board surged to +1.35 from +0.89 last week.

Despite growing optimism over negotiations between the US and Iran, hawkish policymakers continued this week to lay out a conditional case for further tightening, with communication becoming clearer on the possible timing of the first rate increase.

Biggest Movers of the Week: Schnabel, Nagel and Kocher

One of the main drivers behind this week’s hawkish shift was Executive Board member Isabel Schnabel. In her first public remarks since the April meeting, Schnabel adopted a noticeably more hawkish tone compared with her comments ahead of the meeting.

This week, Schnabel dropped the previous wait-and-see and “no rush” rhetoric, instead outlining a conditional case for tighter policy. She said that “[i]f the energy price shock broadens, monetary policy will need to tighten to contain the risk of second-round effects threatening medium-term price stability.”

Austrian National Bank Governor Martin Kocher struck a similar note, backing a conditional path toward tighter policy while avoiding any explicit reference to timing. He said that “if nothing improves, then we must indeed also think concretely about how things can continue, and that would mean interest rate hikes at some point over the next few months.”

Unlike Schnabel and Kocher, Deutsche Bundesbank President Joachim Nagel provided a more direct indication of when tightening could begin. While still presenting hikes as conditional on the outlook, Nagel framed further action as the baseline scenario unless conditions improve significantly.

“If the outlook does not improve noticeably, I would expect us to raise interest rates in June,” he said, offering the clearest guidance so far on the timing of the next move.

Also notable were comments from Banque de France Governor François Villeroy de Galhau, who appeared to distance himself from Nagel’s approach and pushed back against giving explicit guidance on when the first rate hike might take place.

Dominant Themes in This Week’s Communication: Debate Over Guidance on Hike Timing

As was the case following the March press conference, policymakers used the period after the April Governing Council meeting to reinforce the possibility of a rate hike at the subsequent meeting, this time scheduled for June 11. While communication remains conditional overall, references to June as the likely timing for the next move became more explicit this week.

In addition to Nagel, who said a June hike would be warranted unless the outlook improved significantly, Bank of Lithuania Governor Gediminas Šimkus also described a June move as likely.

At the same time, this increasingly direct guidance has prompted some pushback from policymakers reluctant to pre-commit to a specific timetable. Villeroy was among those expressing caution, while Kocher likewise argued against signalling a June hike too explicitly.