By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Gediminas Šimkus said Wednesday that the ECB’s June 11 rate hike was too small to settle the euro area’s inflation issue and that at least one further increase was more likely than not.

Šimkus, who heads the Bank of Lithuania, told media in Vilnius that the ECB’s 25bp move had not been sufficient by itself to address rising inflation in the Eurozone.

“If you ask whether that is enough, whether that is the end, I think this increase would be too small to close the issue of inflation growth in the Eurozone”, he said.

Asked when the next rate hike could come, Šimkus said he could not answer, but added that “one more increase is certainly more likely than not.”

Higher energy and other commodity prices had already passed through to markets, while short-term inflation expectations had risen, he said.

Traders’ expectations of price increases were also visible, making it important to ensure that “a change in short-term expectations does not become a change in long-term inflation expectations”, he said.

Oil prices had fallen somewhat but remained high, Šimkus observed.

What mattered most was not the US-Iran agreement itself, but how commodity prices, expectations and broader economic variables developed, he said.