By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Joachim Nagel said on Thursday that the conflict in Iran was likely to have a greater impact on inflation than on economic growth.

In an interview with Bloomberg TV, Nagel, who heads the Deutsche Bundesbank, said that it was still “very early” to react to the conflict, adding that the outlook could become “much clearer” by the time the Governing Council meets on 18–19 March.

The ECB should wait for more information on how the conflict affects growth and inflation before taking any decisions, he said.

Asked whether the situation was comparable to the surge in energy prices in 2022, Nagel said the circumstances were different, noting that quantitative easing programs were in place at that time.

“[I]t looks like the short-term impact, but pretty much again is dependent on the duration of the war, is more on the inflation side, because there is more momentum for Germany on the growth side,” he said. “So, at the moment there is more impact coming on the inflation front in relation to what I see on the real economy side but again we have to wait.”

On the exchange rate, Nagel said the US dollar was now stronger than the euro but that the moves were within a range that was “not something that is a major concern.”

 

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