Energy prices will dictate whether the European Central Bank needs to hike interest rates into restrictive territory, Germany's central bank chief told CNBC on Friday.

"It's very much dependent on how the energy prices evolve, how the price picture is evolving over the course of maybe the next month," Joachim Nagel told CNBC's Annette Weisbach in an interview, the day after the ECB hiked its key interest rate by a quarter percentage point to 2.5%.

He was speaking as oil prices remained elevated, with global benchmark Brent crude and U.S. WTI both trading above $100 a barrel on Friday morning. European gas prices are also under pressure, with Dutch TTF futures hitting the highest level since 2022.

Nagel said he believed rates were currently at the upper end of neutral territory — when monetary policy is neither stimulating nor restricting economic growth — but he could not rule out the need to enter "mild restrictive territory."

Asked whether one or two more hikes were possible in the current cycle, Nagel said: "It's too early to speculate on this. What we see is that energy prices went up last week, now we are close to $110 [per barrel crude oil]."

"We saw a lot of volatility over the course of the last month. What we did yesterday is a reflection of our forecast."

"It is not clear what are the energy prices doing over the next weeks and months, so I think it is dependent on the energy price development and I will do my assessment when we are coming together the next time," he said.

Nagel told CNBC he was not concerned about the relatively low levels of European gas storage heading into winter, adding the situation was not comparable to the energy crisis of 2022-2023 due to greater options for buying LNG.