Exclusive: ECB will react if Iran war pushes up inflation, Nagel says

Core Viewpoint - The European Central Bank (ECB) will respond quickly and decisively to rising inflation risks stemming from increased fuel prices due to the Iran war [1][3]. Group 1: ECB's Stance and Actions - ECB policymaker Joachim Nagel indicated that the central bank is prepared to act if energy price increases lead to sustained inflation in the euro zone [1][3]. - The ECB is expected to maintain current interest rates in its upcoming meeting while assessing potential growth and inflation scenarios related to the ongoing conflict [3]. - Nagel supports a "wait-and-see approach" but acknowledges that the recent turmoil has likely ended discussions about inflation falling below the ECB's 2% target [4]. Group 2: Inflation Outlook - The risk of higher inflation has increased due to the recent spike in energy prices, which has negatively impacted the economic outlook [2][4]. - Inflation in the euro zone has been around 2% for over a year, but the current situation raises concerns about future inflation trends [5].