By Marta Vilar – MADRID (Econostream) – Following is a collection of views expressed by ECB Governing Council members on the Middle East conflict and its implications for monetary policy following the Governing Council meeting on 19 March:
Conditional guidance to hikes:
- Primož Dolenc (Banka Slovenije)
1 April 2026
“If there is a sign that higher energy prices will seep into other parts of the economy fairly quickly, and inflation expectations will rise quickly because of the memory effect, then we would need to consider acting sooner rather than later, in part to preserve our credibility.” - Peter Kažimír (National Bank of Slovakia)
31 March 2026
The longer the Iran war and the more damage it causes, “the greater the risk of inflation will be,” meaning the ECB will have to respond “sooner and more decisively.” - Yannis Stournaras (Bank of Greece)
30 March 2026
“The policy implication is clear. If signs were to emerge that second-round effects are gaining traction, or that inflation expectations are beginning to drift, the ECB will have to respond quickly to help ensure that inflationary pressures do not become entrenched in expectations.” - Yannis Stournaras (Bank of Greece)
30 March 2026
If the assumptions of the baseline worsened, “monetary policy decisions will also be affected accordingly, to prevent second-round inflationary effects.” - Pierre Wunsch (National Bank of Belgium)
27 March 2026
“If the conflict is not over by June, then we are most probably way above our baseline, and that would probably warrant some kind of reaction.” - Madis Müller (Eesti Pank)
27 March 2026
“You could argue that once we are sufficiently confident that second-round effects are very likely – in addition to the more immediate indirect pass-thorugh of higher energy prices into some goods and services – it would already be reasonable for the ECB to consider raising rates.” - Luis de Guindos (ECB)
26 March 2026
“If inflation expectations start to be de-anchored, then the ECB will have to react. So this is the issue. And I think that inflation expectations are going to be extremely interconnected with the duration and the expansion of the conflict. That's why having additional information about the evolution of the war in the Middle East is going to be crucial for us.” - Christine Lagarde (ECB)
25 March 2026
“Second, if the shock gives rise to a large though not-too-persistent overshoot of our target, some measured adjustment of policy could be warranted. The optimal response to such a deviation is smaller when the cause is exogenous supply disruptions rather than strong demand, but it is not necessarily zero. Moreover, to leave such an overshoot entirely unaddressed could pose a communication risk: the public may find it difficult to understand a reaction function that does not react. Third, if we expect inflation to deviate significantly and persistently from target, the response must be appropriately forceful or persistent. Otherwise, self-reinforcing mechanisms would kick in and the risk of de-anchoring would become acute … It is too early to say where on this spectrum we will need to be.” - Mārtiņš Kazāks (Latvijas Banka)
25 March 2026
“If I saw signs that inflation was becoming entrenched and spreading across sectors, with meaningful second-round effects, then an early move would be warranted to contain it before those dynamics intensified.” - Olaf Sleijpen (De Nederlandsche Bank)
24 March 2026
The ECB could “act if we see second-round effects,” more evidence on this front should be available by April. - Mārtiņš Kazāks (Latvijas Banka)
24 March 2026
“Financial markets are expecting those two increases, by the end of the year by about 50bp. And is that a plausible scenario? Quite possibly. But whether that will happen we’ll see. Because we don’t know how long the conflict will last, or what the oil price will be.” - Joachim Nagel (Deutsche Bundesbank)
20 March 2026
“As things currently stand, it is conceivable that the medium-term inflation outlook could deteriorate and inflation expectations could rise on a sustained basis, meaning that a more restrictive monetary policy stance would probably be necessary.”
More than one hike:
- Madis Müller (Eesti Pank)
27 March 2026
“One hike would imply that the war in the Middle East had a sufficient impact on inflation outlook to call for ECB action. At the same time, it would still suggest that the war ends relatively soon without energy prices staying elevated for an extended period and has only a limited impact. In that sense, yes, we would be fortunate. But even so, each hike is meaningful in itself. One decision does not automatically imply another … very dramatic moves are unlikely to be necessary.” - Mārtiņš Kazāks (Latvijas Banka)
25 March 2026
“But it is true that a single isolated hike would be somewhat unusual. Ultimately, it depends on the size and persistence of the shock. If the objective can be achieved with less tightening, then there is no reason to do more than necessary. Still, if one hike alone were enough, that would amount to a lucky coincidence.”
Inclination toward hikes:
- Joachim Nagel (Deutsche Bundesbank)
25 March 2026
“This is certainly a situation in which every passing day contributes to an increase in inflationary risks, particularly with regard to what interests us most from a monetary policy perspective: how medium-term inflation expectations will evolve.” - Mārtiņš Kazāks (Latvijas Banka)
24 March 2026
“Of course we won’t delay and we will raise rates … We’ll see. April is very close.” - Boris Vujčić (Croatian National Bank)
24 March 2026
“I don’t think that one or two hikes would do much harm to the economy … you have to ask yourself whether they’re needed or not, because some would also argue that one or two cuts wouldn’t do too much good to the economy.”
References to April meeting:
- Gediminas Šimkus (Bank of Lithuania)
2 April 2026
“Whether action is already required in April, it’s definitely too early to make such generalizations at this point. We can only do guesswork on how the situation in Iran will evolve, what the final consequences will be.” - Primož Dolenc (Banka Slovenije)
1 April 2026
“We cannot say today whether we’ll have enough information by April 30. If we don’t have enough information, then probably it would be worthwhile to wait until June, when we have updated projections for next three years.” - Boris Vujčić (Croatian National Bank)
31 March 2026
“Nothing is certain, there will be a lot of data and news by the time of our meeting in April.” - Madis Müller (Eesti Pank)
31 March 2026
“We certainly can’t rule out changes in interest rates already in April if energy prices remain at a high level for a long time.” - Pierre Wunsch (National Bank of Belgium)
27 March 2026
I am “patient today, but in April, if we’re still there, I might not be patient … But April is not out of the question. If by April we have solid evidence that the shock will be lasting and will lead to a big hike in inflation that that is likely to have some degree of persistence, then we might have to do something, but we still have some time before the April meeting, and I don’t want to take any bet in one or the other direction.” - Primož Dolenc (Banka Slovenije)
27 March 2026
“[B]y the next meeting at the end of April there will be more clarity. Then a more informed reflection on a possible intervention will be possible.” - Madis Müller (Eesti Pank)
27 March 2026
“Yes, of course [every meeting is live].” - Luis de Guindos (ECB)
26 March 2026
“So, when we say that we need to have more information, I think that refers mainly to the information about the developments of the conflict. That is going to be the key variable in order to determine our monetary policy stance.” - Mārtiņš Kazāks (Latvijas Banka)
25 March 2026
“So every meeting is live. That doesn’t mean the answer for April is yes or no today. It simply means that our modus operandi is to assess conditions meeting by meeting. That approach has served us well, and I support maintaining it. Again, though, I would remain attentive to possible nonlinearities in the behavior of firms and households. And we may have more data on that already in April.” - Joachim Nagel (Deutsche Bundesbank)
25 March 2026
A hike in April is “certainly an option, but just one option” … The ECB should have enough data by then to decide whether to proceed, “we shouldn’t shy away from it [hiking in April] now just because we think it’s still too early.” - Olaf Sleijpen (De Nederlandsche Bank)
24 March 2026
The ECB could “act if we see second-round effects,” more evidence on this front should be available by April … Incoming data then would still be “limited” and “the complete picture will not have emerged” by then. - Mārtiņš Kazāks (Latvijas Banka)
24 March 2026
“Of course we won’t delay and we will raise rates … We’ll see. April is very close.” - Boris Vujčić (Croatian National Bank)
24 March 2026
“It’s a long time in today’s world until April. There’ll be a lot of data and news,” and “in such situations, everything is live … the option value of waiting a bit is high.” - Luis de Guindos (ECB)
23 March 2026
“At the next Governing Council meeting in April, we will have more data on the conflict, which is the main source of uncertainty, and we will decide from there.” - Mārtiņš Kazāks (Latvijas Banka)
20 March 2026
“[F]or the time being, we are not rushing; we will monitor developments carefully, and at the next meetings – with the next one already in April – we will assess what needs to be done on the monetary policy side.” - Gabriel Makhlouf (Central Bank of Ireland)
20 March 2026
“The next meeting is a live meeting, definitely.” - Joachim Nagel (Deutsche Bundesbank)
20 March 2026
More “reliable data” about conditions that could lead to a more restrictive monetary policy should be available by April 30.
Soft signaling at action if necessary:
- Gediminas Šimkus (Bank of Lithuania)
2 April 2026
“There is no reason to doubt that the necessary measures will be taken to bring inflation back to an equilibrium level, to 2% in the medium term.” - François Villeroy de Galhau (Banque de France)
30 March 2026
We “are ready to act in this direction if needed.” - Pierre Wunsch (National Bank of Belgium)
27 March 2026
“I think so far we were able to communicate the fact that we would react if need be, but that we were not going to rush to do anything that would be looking like overreaction … But I would say, if you are still close to the baseline, that it’s not clear we have to react.” - Mārtiņš Kazāks (Latvijas Banka)
25 March 2026
“[W]e should remain patient, but be ready to act when necessary. At the ECB, that means every meeting is live and forward guidance is not appropriate.” - Madis Müller (Eesti Pank)
27 March 2026
“We should monitor the situation, look at the incoming data, and be ready to act in a timely way if conditions warrant it. But we also don’t need to act prematurely, before we see a clear indication that action is needed.” - François Villeroy de Galhau (Banque de France)
26 March 2026
The ECB has the capacity to react “if and when necessary.” - François Villeroy de Galhau (Banque de France)
25 March 2026
“I want to say another word about inflation, which is our responsibility: we, the central banks, will do what is necessary to bring inflation back to a maximum of 2% in 2027 and 2028.” - Olli Rehn (Bank of Finland)
25 March 2026
“[M]onetary policy will do its part. We will keep inflation expectations anchored and ensure price stability over the medium term. In a world of geopolitical shocks, this stability is more important than ever. We will provide a steady hand, which is in short supply today.” - Álvaro Santos Pereira (Banco de Portugal)
25 March 2026
The ECB is “ready to respond to any eventuality.” - Dimitar Radev (Bulgarian National Bank)
23 March 2026
“[W]e will act decisively, based on incoming data, but we will remain measured.” - Peter Kažimír (National Bank of Slovakia)
23 March 2026
“There is little we can do to prevent a spike in inflation in the coming months. However, if we judge that the risk of it remaining above our target for a prolonged period is significant, we will act with appropriate decisiveness to bring inflation back to the target level.” - Luis de Guindos (ECB)
23 March 2026
“We are ready to respond as necessary. Of course, we are concerned by the situation. Monetary policy cannot prevent the war from having an initial impact on both inflation and growth, but the ECB can monitor the situation and be alert to potential second-round effects.” - Joachim Nagel (Deutsche Bundesbank)
20 March 2026
“Given the Iran war and its impact on inflation, it is crucial to remain highly vigilant in monetary policy. Since the medium-term consequences for inflation cannot yet be reliably assessed, a wait-and-see approach is appropriate. We can react quickly if necessary.” - François Villeroy de Galhau (Banque de France)
20 March 2026
The ECB has “the capacity to act as much as necessary and when it is necessary” … “Today, I believe that rather than optionality, I would highlight the capacity to act as much as necessary and when it will be necessary.” - Gabriel Makhlouf (Central Bank of Ireland)
20 March 2026
“If the facts point to us having to take action, we’re going to absolutely take action. But in the end, it depends on the evidence.” - Christine Lagarde (ECB)
19 March 2026
“[W]e start from a good position and we are well positioned to demonstrate our capacity to apply our strategy and to be agile, to do what is necessary.”
Wait-and-see approach:
- Gediminas Šimkus (Bank of Lithuania)
2 April 2026
“Whether action is already required in April, it’s definitely too early to make such generalizations at this point. We can only do guesswork on how the situation in Iran will evolve, what the final consequences will be.” - Gabriel Makhlouf (Central Bank of Ireland)
1 April 2026
“We held rates at 2% because the outlook is genuinely uncertain. But we are learning to live with uncertainty and to not be paralyzed by it. We have a framework for monitoring how the outlook evolves and a credible commitment to act when data clarifies the direction of travel. And as I said, we are not pre-committing to a path and not ruling options in or out.” - Fabio Panetta (Banca d’Italia)
31 March 2026
“In such an uncertain and ever-shifting environment, it will be essential to monitor expectations closely and to prevent a wage-price spiral, while ensuring that monetary policy action remains proportionate and consistent with the ECB’s mandate.” - Philip Lane (ECB)
30 March 2026
“So, we will be looking at all of these considerations. No paralysis, but no kind of preemption either.” - Isabel Schnabel (ECB)
27 March 2026
“We have to be agile. We have to be vigilant, but there is no need to rush into action.” - Christine Lagarde (ECB)
25 March 2026
“It is too early to say where on this spectrum we will need to be.” - Mārtiņš Kazāks (Latvijas Banka)
20 March 2026
“[F]or the time being, we are not rushing; we will monitor developments carefully, and at the next meetings – with the next one already in April – we will assess what needs to be done on the monetary policy side.” - Madis Müller (Eesti Pank)
20 March 2026
“The fact that we once again did not change interest rates does not mean that everything is now calm or that the outlook has not changed.” - Madis Müller (Eesti Pank)
20 March 2026
“[I]t is wise for us to wait for clearer signs of the potential impact of the energy price shock before changing interest rates. There is currently a great deal of uncertainty about the economic impact of the Iran war, and it is not wise to rush into a dark room … it is too early to express a clear opinion on how the central bank would react to the new economic situation by changing interest rates.”
Reluctance to hike:
- Yannis Stournaras (Bank of Greece)
1 April 2026
“When the war stops, yes, we will have, let’s say, side effects. Inflation will not fall overnight, but it will not last long. In my opinion, we will return to normality after a certain period of time.” - Olli Rehn (Bank of Finland)
31 March 2026
A rate hike is “not guaranteed” after the latest euro-area inflation reading, as the figure was “expected.” - Yannis Stournaras (Bank of Greece)
30 March 2026
“Inflation in the euro area has been around the 2% target for almost a year and, in fact, has slightly undershot our symmetric target in the first two months of this year. This provides some slack for future rate tightening.” - François Villeroy de Galhau (Banque de France)
30 March 2026
“[T]he debate on pre-established dates appears very premature.” - François Villeroy de Galhau (Banque de France)
26 March 2026
There has been “some overinterpretation of statements regarding a supposed timetable for rate hikes,” this debate is “premature.” - Olli Rehn (Bank of Finland)
25 March 2026
“[On the 2011-14 oil price surge following the Arab Spring] Do I need to remind us that the ECB’s two subsequent rate hikes of spring 2011 were reversed in November and December 2011?” - Álvaro Santos Pereira (Banco de Portugal)
25 March 2026
“Speculating about interest rates now would be more than premature.” - François Villeroy de Galhau (Banque de France)
20 March 2026
“It [the direction of the next move] will depend on developments … the conflict that is setting in … is gaining in intensity rather in the direction that you say [hikes], we cannot totally exclude a scenario in the other direction even if it is obviously much less probable today.” - Olli Rehn (Bank of Finland)
20 March 2026
“Current inflation in the euro area and longer-term inflation expectations remain close to the ECB's 2% target, although we see price increases in the coming months. Against this background, the Governing Council of the ECB decided yesterday to keep key interest rates unchanged. Any other policy decision at this stage would have been premature.”
Openness to looking through the shock:
- Christine Lagarde (ECB)
25 March 2026
“Small, one-off and short-lived supply shocks can be looked through. But as expected deviations from our inflation target grow larger and more persistent, the case for action becomes stronger.” - José Luis Escrivá (Banco de España)
20 March 2026
“[S]ometimes there are situations that subside and do not necessarily entail a change in interest rates.”
Market expectations:
- Primož Dolenc (Banka Slovenije)
1 April 2026
“We will not be simply driven by market expectations. But we will for sure do whatever we can to bring inflation down to our 2% target in the medium term.” - Olli Rehn (Bank of Finland)
31 March 2026
It is “better to assess monetary policy carefully,” even though “markets clearly price in rate hikes from the ECB.” - Pierre Wunsch (National Bank of Belgium)
27 March 2026
I am “comfortable with what I see in the market,” but “market signals or reaction will be different next week and the week after next.” - François Villeroy de Galhau (Banque de France)
26 March 2026
There has been “some overinterpretation of statements regarding a supposed timetable for rate hikes,” this debate is “premature.” - Luis de Guindos (ECB)
26 March 2026
Markets are discounting a “benign” scenario, which is “very close” to the ECB’s baseline. - Mārtiņš Kazāks (Latvijas Banka)
25 March 2026
“Market expectations may be reasonable, but at this stage we simply do not know.” - Mārtiņš Kazāks (Latvijas Banka)
24 March 2026
“Financial markets are expecting those two increases, by the end of the year by about 50bp. And is that a plausible scenario? Quite possibly.” - Mārtiņš Kazāks (Latvijas Banka)
20 March 2026
“But if we look at financial market pricing, then financial markets expect that rates during this year will be raised. And that Euribor has risen a little. But at this moment we have decided to leave central bank rates at the current level. And then we will see, looking at how the economy develops.” - Gabriel Makhlouf (Central Bank of Ireland)
20 March 2026
“I can well understand why they [markets] have assumed that [two ECB hikes in 2026]. But we have no predetermined path.”
Outlook worsening:
- Fabio Panetta (Banca d’Italia)
2 April 2026
“The macroeconomic projections of the European Central Bank, released two weeks ago, already included two unfavorable scenarios, today more plausible than they were at the time of publication.” - Primož Dolenc (Banka Slovenije)
1 April 2026
“My personal impression is that baseline scenario appears to be more like a best-case scenario for the future and probably the current adverse scenario is more likely to be our next baseline.” - Madis Müller (Eesti Pank)
31 March 2026
“The base-case scenario … can probably be considered to be the optimistic scenario.” - Fabio Panetta (Banca d’Italia)
31 March 2026
“Even in the event of a rapid ceasefire, a return to orderly conditions in the energy market would take some time.” - Yannis Stournaras (Bank of Greece)
30 March 2026
“The war, if sustained, is bound to produce stagflationary effects, that is higher inflation and lower growth. In this case, our ECB baseline scenario will no longer be valid.” - Primož Dolenc (Banka Slovenije)
27 March 2026
“[W]e can conclude that they [the June projections] will be somewhat worse.” - Christine Lagarde (ECB)
26 March 2026
“We are facing a real shock… probably beyond what we can imagine at the moment,” there is “no way” lost energy capacity could be restored within months, disruptions could persist for “years.” - Mārtiņš Kazāks (Latvijas Banka)
25 March 2026
“As for the alternative scenarios, we should not jump to the conclusion that they have already materialized.” - Philip Lane (ECB)
25 March 2026
“If I did it [an assessment of the shock using an ECB synthetic indicator] this week, I think it’s more like a medium-to-large shock,” rather than a medium shock, which is what it was considered to be on 19 March. - Boris Vujčić (Croatian National Bank)
24 March 2026
The economy is already moving away from the baseline toward worst-case scenarios.
Second-round/indirect inflation effects:
- Primož Dolenc (Banka Slovenije)
1 April 2026
“Second-round effects might not take as long to take hold as in our last inflation episode. People and firms have a fresh memory of the inflation spike in 2022. And this is one of our biggest worries.” - Pierre Wunsch (National Bank of Belgium)
27 March 2026
“If the economy weakens fast, then the second-round effects might be limited, which might warrant less of a move.” - Madis Müller (Eesti Pank)
27 March 2026
“Once energy prices have stayed elevated for some time, I am sure we would soon begin to see at least some indirect effects. That is still somewhat different from second-round effects … Once energy prices have remained elevated for several weeks, one can already be reasonably confident that second-round effects are likely.” - François Villeroy de Galhau (Banque de France)
26 March 2026
“[W]e must remain extremely vigilant regarding the second-round effects.” - Mārtiņš Kazāks (Latvijas Banka)
25 March 2026
“[I do] not [see second-round effects] to any significant extent yet. What I see at this stage is the possibility of second-round effects, not clear evidence of them. That is something we need to be attentive to. The fiscal response will be critical here. If governments resort to overly broad support measures, the likelihood of nonlinear effects rises substantially.” - Olaf Sleijpen (De Nederlandsche Bank)
24 March 2026
The ECB could “act if we see second-round effects,” more evidence on this front should be available by April. - Christine Lagarde (ECB)
24 March 2026
The conflict has caused “[d]isruption in shipping, disruption in insurance costs and significant increases in the price of energy, which as we know is necessary for all economies and has ripple effects in a matter of months.” - François Villeroy de Galhau (Banque de France)
24 March 2026
The ECB must prevent second-round effects. - Martin Kocher (Austrian National Bank)
24 March 2026
“It’s important that we’re keeping a very close eye” on second-round effects. There is no evidence yet in the data that such effects have begun to emerge. - Boris Vujčić (Croatian National Bank)
24 March 2026
The risk of second-round effects is smaller now than in 2022. - Dimitar Radev (Bulgarian National Bank)
23 March 2026
There are “some indications” of second-round effects. - Joachim Nagel (Deutsche Bundesbank)
20 March 2026
“Monetary policy cannot prevent a short-term rise in inflation resulting from an energy price shock. However, it must act when second-round effects become apparent and longer-term inflation expectations rise above the inflation target, because then high inflation threatens to become entrenched.” - Christine Lagarde (ECB)
19 March 2026
“And there is a bit of propagation actually, some of it being judgmental. Some indirect effects, some secondary effects as well.”
Stagflation:
- Yannis Stournaras (Bank of Greece)
30 March 2026
“The war, if sustained, is bound to produce stagflationary effects, that is higher inflation and lower growth.” - Madis Müller (Eesti Pank)
27 March 2026
“I do not think it is appropriate to speak of stagflation. To me, that remains a tail risk.” - Boris Vujčić (Croatian National Bank)
24 March 2026
The euro area is not yet in stagflation, but “the risk is moving into the direction of stagflation.” - François Villeroy de Galhau (Banque de France)
20 March 2026
“I heard a lot the word stagflation, which would be at the same time a stagnation of activity and then an inflation that settles. It is not what it is about.” - Yannis Stournaras (Bank of Greece)
19 March 2026
“The war, if sustained, is bound to produce stagflationary effects, that is higher inflation and lower growth.”
Economic growth:
- Yannis Stournaras (Bank of Greece)
1 April 2026
“At the moment, no one is saying that we will enter a recession, at least for the time being, but if it continues, if we go to scenarios above 150 dollars per barrel, nothing is excluded.” - Pierre Wunsch (National Bank of Belgium)
27 March 2026
“If the economy weakens fast, then the second-round effects might be limited, which might warrant less of a move.” - Luis de Guindos (ECB)
23 March 2026
“No, we don’t expect it [the conflict] to [trigger a recession]. Even in the most severe scenarios, we are still seeing positive growth, but I wouldn’t focus too much on the specific figures. Forecasts are always difficult, and even more so in the current context.” - Mārtiņš Kazāks (Latvijas Banka)
20 March 2026
“I think that we cannot exclude the risk of recession today, if this war continues for a long time [and] this negative effect on energy resource prices and on production capacity is considerably larger than we have seen so far. But at the same time maybe that conflict ends very quickly, so uncertainty is high.” - Olli Rehn (Bank of Finland)
20 March 2026
“Euro area growth is predicted to remain sluggish in the coming years.”
Analogies with other inflation shocks:
- Gediminas Šimkus (Bank of Lithuania)
2 April 2026
“We have a much smaller shock than we had in 2022.” - Yannis Stournaras (Bank of Greece)
30 March 2026
“During the 2021-2022 inflation spike, inflation expectations remained contained -- the euro area 5-year/5-year forward inflation-linked swap rate stayed below 3% throughout that episode, despite the fact that actual inflation reached double-digit levels. Reflecting the well-anchored inflation expectations, nominal wage growth was initially relatively subdued, while real wages declined sharply before gradually recovering, as workers sought to recoup the purchasing power eroded by the inflation surge. Crucially, there was no wage-price spiral. That pattern of contained nominal wage growth may be more difficult to achieve this time around, if the war in the Middle East continues, for two main reasons.” - Philip Lane (ECB)
30 March 2026
“2026 is not 2022. We don’t have the strong pandemic reopening effects. The labor market is softer than it was then.” - Pierre Wunsch (National Bank of Belgium)
27 March 2026
“We have the textbook, and we need to find a middle way between what we have in the textbook, which is we don't react, and the experience we had in 2022. But in 2022, of course, there were a lot of bottlenecks in the system, very tight labor markets. You had a lot of fiscal support coming out of the COVID crisis, and that's not the situation we are in today. The labor market is a bit weaker in Europe.” - Primož Dolenc (Banka Slovenije)
27 March 2026
Compared with 2022, the euro area is now in “a significantly better position” in terms of both inflation and growth. - Madis Müller (Eesti Pank)
27 March 2026
“[W]e are in a very different situation from 2022, when we did move in larger steps. At that time, rates were at minus 0.5% and inflation was already well above target. The starting conditions were completely different, and we needed to catch up with a rapidly changing situation. Now, by contrast, inflation was at 2% before the war began, and interest rates were already more or less around neutral. That means we are in a much better starting position to respond to whatever happens.” - François Villeroy de Galhau (Banque de France)
25 March 2026
The current shock differs from those of 1973 and 1979, as those were “permanent,” whereas current price pressures, like in 2022, are expected to ease over time. - Olli Rehn (Bank of Finland)
25 March 2026
“[On the 2011-14 oil price surge following the Arab Spring] Do I need to remind us that the ECB’s two subsequent rate hikes of spring 2011 were reversed in November and December 2011?” - Dimitar Radev (Bulgarian National Bank)
23 March 2026
The ECB is now “in a much better position to address challenges ahead” than in the 2022 inflation shock. - Olli Rehn (Bank of Finland)
20 March 2026
“Whether the oil shock will generate longer-term inflationary pressure will be significantly affected by the general economic and labor market conditions. In 2022, when energy prices rose, the euro area economy was recovering strongly from the worst phase of the COVID crisis, but now geopolitical tensions and tariff increases are in the background.” - Joachim Nagel (Deutsche Bundesbank)
20 March 2026
The 2022 experience will “play an important role in this context,” and the ECB is now “in a better starting position.” - Madis Müller (Eesti Pank)
20 March 2026
“[T]he euro area economy as a whole is now in a quite different state than it was four years ago. According to the latest data, euro area inflation is 1.9%, but in March 2022 the annual price increase reached 7.4%. We no longer have the post-pandemic bottlenecks in supply chains, which also created the prerequisites for a sudden acceleration of price increases at that time. The central bank's main interest rate was -0.5% at the time, but now it is significantly higher at 2%, which in itself does not give additional impetus to price increases.” - Christine Lagarde (ECB)
19 March 2026
“I think another point that we have to keep in mind is that back in 2022, when the shock hit, inflation was already at 6%. That’s a big difference with where we are at the moment, where the latest reading was 1.9% and we had inflation at target in the medium term. So that’s a major difference. I think the labor market is also quite a bit different. And I’m not saying that to avoid your question, but I think all this actually matters. The fact that we have a labor market which is solid but not as hot as it was back in 2022, where we had shortages of labor and a different bargaining position, will also play a role. A caveat though: inflation expectations have a lot to do with the memory that people and corporates have of inflation. And back in 2022 the memory was dating way back. Now the memory is rather fresh because people have seen inflation. So, the reaction function that they will have in terms of investment, in terms of wage negotiations and in terms of consumption is going to be informed by a fresher memory of inflation that went high and that we managed to bring back to 2%. I think the third element which is different as well and that we will have to be attentive to is that while it was a major supply shock to begin with, in 2022 we had the pent-up demand and a demand shock element about the situation that we faced.”
