By David Barwick and Marta Vilar – FRANKFURT (Econostream) – We return from the IMF Spring Meetings in Washington yet more convinced that treating a June hike as the inevitable byproduct of an April hold understates the risk that June, too, will prove too early.

That is not to say that the ECB cannot hike on June 11 if the fighting in the Middle East is still ongoing then—or even if it is not. A hike is of course realistic; we are merely saying that June has growing potential to become “the new April”—in other words, a month that initially appeared destined to bring a hike, only to wind up, with the passage of time, being deemed too early for a move.

We argued similarly last Wednesday (local time in Washington), inferring mainly from public comments by Council members. We revisit the topic now with the benefit of having spoken to eight officials on background.

What emerged is a Council that has grown more hesitant about near-term tightening; still sees meaningful upside inflation risk if the war shock proves persistent; but is also wary of exacerbating the economic fallout before it has clearer evidence that the shock is spreading beyond the initial energy hit.

One official said June would bring “more information, not an obligation.” Another said flatly that “June is not a given.” A third stressed that there was “no automaticity” from an April hold to a June move. Even among the more hawkish, there was little sign of anyone treating April or June as dates with destiny.

That is partly because the central question was not the calendar but persistence. Again and again, officials returned to the same issue: whether the shock lasts long enough to bleed into the broader inflation process. One policymaker put it like this: if the shock proves temporary, the ECB can look through it; if it persists, it cannot ignore it. Another said the “elephant in the room” was the war itself — how long it lasts, and how long supply bottlenecks endure.

Infrastructure damage was at the heart of that concern. One official was especially emphatic that the most dangerous development for both the economy and the inflation process was not simply a temporary transit disruption but the destruction of physical oil and gas infrastructure. Another policymaker, one of the more hawkish voices, said it was hard to see how even a quick resolution could undo the damage already done.

For all that concern, most officials did not yet see second-round effects that would force the ECB’s hand immediately. What is visible so far is “direct cost pressure, not generalized wage pass-through,” one said. Another said there was anecdotal evidence of firms raising prices, but “nothing conclusive” yet in wages. Even one of the hawkish outliers acknowledged that “we do not actually see clear second-round effects at the moment.” In that regard, the Council still sounds some way from the kind of self-sustaining inflation dynamic that would make delaying policy tightening obviously irresponsible.

That same caution is reinforced by the fact that officials anticipate little decisive new information before April. One said that outside geopolitical developments, almost everything relevant was already public, with the corporate telephone survey—as also noted by Central Bank of Malta Governor Alexander Demarco in our interview—one of the very few ECB-internal inputs and unlikely to change the debate unless it showed an exceptionally strong move.

Another said June’s value was that it would at least bring two more inflation prints and fresh projections. A third said that the lack of substantive new information before April made an immediate move harder to justify.

Another reason for the reluctance to draw sweeping conclusions now is distrust of highly volatile market signals. One policymaker argued that headline oil moves could be giving a false sense of comfort, since the prices actually being paid in real contracts may be materially higher than the quoted benchmark. The same official said policymakers should avoid reacting too quickly to highly volatile market moves, since in such a turbulent environment conclusions can be overtaken almost immediately.

The result is a Governing Council more cautious than when oil was trading in the $110-$120 range, without sounding outright dovish. One official who had been much more convinced in late March that a rate move would eventually be needed said the probability of no monetary policy response had now risen from near zero to something meaningfully higher. But even that same official did not seem inclined to take much comfort from lower oil prices, given his concern that benchmark prices might be understating the actual shock hitting the economy.

Another policymaker said it was simply “too early” to conclude that the ECB would eventually have to validate market pricing. A third said the better description of the present environment was that all options remained open because too much still depended on ceasefires, talks, and the risk of renewed escalation.

One theme that surfaced in several conversations was the reluctance to tighten into a weakening economy. More than one official suggested that softer growth, tighter financial conditions, or outright market stress might themselves dampen price pressures enough to weaken the case for raising rates. One said the real economy might “do some of the work for us.” Another argued, in substance, that if the economy weakened materially, tightening could simply make matters unnecessarily worse. A third noted that weaker activity would curb firms’ ability to pass on costs.

Private caution, in other words, may run deeper than public tone suggests. One official whose recent public remarks have sounded hawkish seemed more open in private to waiting, looking through, or allowing volatility to settle before drawing policy conclusions. But the same official also made clear that this was not a retreat from the baseline tightening outlook: in substance, he said the March projection path with two hikes still looked entirely plausible.

Another official, still hawkish in an absolute sense, nonetheless sounded much less forceful than he had three weeks earlier, emphasizing the lack of clear second-round effects and saying that, for now, he “wouldn’t bet” on a pre-emptive move in two weeks.

Fiscal policy also surfaced more clearly in these conversations than in much of the ECB’s public messaging. One official said the medium-term outlook depended importantly on what governments do to cushion the shock, arguing that even modest support still adds spending power and can affect how the shock feeds through. Another official, in a more conceptual way, said fiscal mitigation has a role but should be targeted rather than broad. Taken together, the message was that monetary policy cannot be assessed in isolation from the extent to which governments again move to absorb part of the hit.

One official stood out as clearly more hawkish than the others, saying that the tightening bias had become “fairly obvious” and that he remained more inclined to think the ECB would end up hiking than not. But even he did not argue that the next move was merely waiting for the right date, insisting repeatedly that timing remained highly uncertain, that no pre-commitment was possible, and that weaker demand or calmer expectations could still justify waiting. In other words, even the hawkish edge of the Council no longer sounds fully confident about the near-term case for action.

An important distinction between optionality and symmetry emerged, with one official making that point more explicitly than the others: when policymakers now speak of “full optionality,” he argued, they no longer really mean a balanced openness in all directions. The relevant uncertainty, this official suggested, lies much more on the upside in Europe if the bad scenarios materialize.

Others were less blunt, but the same logic was visible beneath the surface of several conversations: the bias against easing remains, the inflationary tail risk is still the more consequential one, and what has weakened is not concern about inflation but confidence that the threshold for action has already been met.

Officials still sound determined to prevent a war-driven supply shock from becoming embedded in broader inflation and expectations. But they also sound increasingly unwilling to behave as if the answer were already known. “Meeting by meeting” was not just a mantra in these conversations; it was the substance of the policy stance.

One official called it the only sensible approach in an environment where policymakers have to be ready to act either way. Another said that under such uncertainty, any attempt at pre-commitment would simply be foolish. The common thread was less conviction that an April hold would lead naturally to a June hike than discomfort with pretending that an April hold would settle anything.

The key takeaway is that the Governing Council is not moving cleanly from April to June, but from stronger confidence in the tightening case to greater conditionality. The officials we spoke to still see enough upside risk to keep tightening alive. They also sound more aware than before that economic weakness, tighter financial conditions, and still-limited second-round effects may yet justify patience. Fiscal cushioning, by contrast, is a separate complication: to the extent that it sustains spending power, it may reduce the amount of disinflationary work the economy would otherwise do on its own.