ECB Warns of Inflation Risks Amid Middle East Conflict
European Central Bank (ECB) policymakers have expressed concerns about growing inflation risks in the eurozone, following a recent escalation of the Iran conflict. Bundesbank President Joachim Nagel warned that the situation remains 'highly fragile' and that intense uncertainty persists.
Nagel noted that the ECB's interest rate hike in June put it in a good position to respond to any deterioration in the inflation outlook, but emphasized that risks remain high. Slovenian central bank chief Primož Dolenc echoed Nagel's sentiments, stating that 'the risks ahead remain high' and that developments around the war in Iran reinforce adverse risks.
Austrian central bank chief Martin Kocher also weighed in on the issue, stating that a hike may become necessary if inflation expectations deteriorate. However, he stopped short of calling for an immediate rate increase at the ECB's next meeting in September.