By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Joachim Nagel on Friday said the ECB should respond in June if the inflation outlook did not improve markedly, warning that developments were less favorable than assumed in the central bank’s earlier baseline scenario.

Nagel, who heads the Deutsche Bundesbank, said in emailed comments that the Governing Council had taken a “vigilant, wait-and-see approach because we want to gain a clearer view of developments.”

“From today’s perspective, the situation is evolving less favorably than in the earlier baseline scenario,” he said. “This makes it all the more appropriate for the Governing Council to respond in June if the outlook does not improve markedly.”

The ECB was conscious of the inflation threat, Nagel said.

“We are aware of the risks to price stability and are ready to act at any time,” he said.

Even the ECB’s baseline scenario incorporated market expectations for rate increases, he said.

“Let’s not forget that the baseline scenario already entails a more restrictive monetary policy,” Nagel said.