FRANKFURT (Reuters). The European Central Bank’s recent rate rise in excess of a decade does not pose a problem. But, Philip Lane, the chief economist for the bank, said that the question now is how much it should increase borrowing costs.

On Friday, the euro area saw a new record in inflation. Investors are hoping that the ECB will end its policies of huge bond purchases and negative rates. These measures were adopted 8 years ago by the ECB as a way to boost slowing price growth.

Lane appeared to confirm investors’ expectation of an immediate increase in the ECB’s deposit rate. Investors expect this in July. But he cautioned against further hikes citing the risk from the outlook in Ukraine.

Lane, speaking on Bloomberg TV said that “The issue isn’t about whether we are going to abandon minus 0.5 (%) deposits rate”.

“The biggest issue that we have to remain data dependent about is the size and timing of interest rates normalisation.”

While the ECB did not define normalisation, Reuters spoke with policymakers to find out what they meant. They said it equated to a policy interest rate of between 1% 1.25%.

Investors have priced in almost 90 basis points of ECB increases by the end this year.

On Friday, data showed that the euro area inflation rose to 7.5% in April. This was due to an increase in food and energy prices.

Nonetheless, even after those volatile items were removed, inflation still rose at 3.9%. This is almost twice the ECB target of 2%, which shows that prices are rising across the entire economy.

Lane stated that inflation was very high in the short-term and it does have its own risks of momentum.

“On the contrary, high energy prices are eating away at disposable incomes. It’s also reducing consumption. The war has scope, especially depending on the outcome.