European Central Bank German Executive Board: The surge in energy prices has worsened the economic outlook and intensified inflation risks

According to a report by Reuters, European Central Bank Governing Council member and Bundesbank President Joachim Nagel stated that if the war in Iran leads to rising fuel prices and subsequently triggers inflation in the Eurozone, the ECB will act swiftly and decisively.

He pointed out that U.S. President Trump's remarks about the war nearing an end, while bringing a "glimmer of hope," have led to soaring energy prices that have worsened the economic outlook and increased inflation risks. He emphasized the need for heightened vigilance. If the current rise in energy prices translates into signs of widespread consumer price inflation in the medium term, the ECB will take timely and decisive action. He also believes that discussions about inflation potentially being below target should now come to an end, but it is still too early to reliably assess the medium- to long-term consequences in the current turbulent situation.

The market expects the ECB to maintain interest rates at next week's meeting, but the probability of raising rates to 2% by the end of the year is slightly above 50%