Further interest rate hikes by the European Central Bank this year are no longer just a tail risk.

⑴ After the European Central Bank raised interest rates by 25 basis points, a macro investment strategist at a private banking institution stated that another rate hike by the European Central Bank before the end of 2026 is no longer a tail risk. ⑵ The strategist pointed out that, driven by the latest escalation of conflict in the Middle East, oil and natural gas prices have risen sharply, bonds have been sold off, and expectations for further tightening by the central bank have increased. ⑶ The strategist stated that the European Central Bank's actions were in line with expectations, but the signals accompanying the decision are more important. ⑷ He added that policymakers remain open to further tightening, making it clear that energy-driven inflation risks are still playing a role. ⑸ This means the market needs to reprice the European Central Bank's rate path, and eurozone bond yields and money market bets may continue to shift in a more hawkish direction. ⑹ Subsequent attention will be focused on the wording at Lagarde's press conference, energy price trends, and core inflation data in the eurozone; these factors will determine whether another rate hike this year shifts from a risk scenario to a baseline scenario.