ECB Governing Council member Joachim Nagel said that as the situation in the Middle East continues to dominate consumer price prospects, the ECB must be prepared to deal with various inflation trends. The Bundesbank governor said on Monday that if the Strait of Hormuz “continues to reopen” and energy transportation returns to normal, it will help ease the pressure; however, if the situation escalates again, it may cause further disturbances and push oil and gas costs up further. “The future trend of inflation will still largely depend on geopolitics,” Nagel said in Sorrento, Italy. “The high level of uncertainty about the inflation outlook requires us to be flexible rather than inaction. The ECB Governing Council will continue to make decisions on a case-by-case basis at every meeting based on data.” The ECB has raised interest rates twice in response to the war with Iran, and policymakers have not ruled out the possibility of further action. Economists expect that the ECB will raise interest rates for the last time in the current interest rate hike cycle in December, raising deposit interest rates to 2.75%.

ECB Governing Council member Joachim Nagel said that as the situation in the Middle East continues to dominate consumer price prospects, the ECB must be prepared to deal with various inflation trends. The Bundesbank governor said on Monday that if the Strait of Hormuz “continues to reopen” and energy transportation returns to normal, it will help ease the pressure; however, if the situation escalates again, it may cause further disturbances and push oil and gas costs up further. “The future trend of inflation will still largely depend on geopolitics,” Nagel said in Sorrento, Italy. “The high level of uncertainty about the inflation outlook requires us to be flexible rather than inaction. The ECB Governing Council will continue to make decisions on a case-by-case basis at every meeting based on data.” The ECB has raised interest rates twice in response to the war with Iran, and policymakers have not ruled out the possibility of further action. Economists expect that the ECB will raise interest rates for the last time in the current interest rate hike cycle in December, raising deposit interest rates to 2.75%.