European Central Bank Governing Council member Pierre Wunsch said that if evidence shows in April that the shock from the Middle East conflict will lead to lasting inflation, the ECB may need to raise interest rates. In a Bloomberg interview, Wunsch explained that a significant, persistent rise in inflation would compel the ECB to consider further tightening. He highlighted the impact of the conflict on euro‑zone inflation and the economy and indicated that the ECB’s future decisions would depend on solid evidence of a lasting shock. Wunsch’s remarks suggest that the ECB remains open to adjusting policy if inflation dynamics remain unfavorable.
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