By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Joachim Nagel said on Thursday that the ECB may raise interest rates in June unless the economic outlook improves significantly.

In an interview with German news network Redaktionsnetzwerk Deutschland, Nagel, who heads the Deutsche Bundesbank, said that inflation in 2026 was likely to be markedly higher than projected before the outbreak of the Middle East conflict.

“At the moment, I assume that inflation will average around 2.7% for the year,” he said. “Under adverse circumstances, it could be even higher.”

Nagel pointed to damage to oil and natural gas infrastructure, warning that restoring previous production levels “could take some time.”

“If the outlook does not improve noticeably, I would expect us to raise interest rates in June,” he said.

Assuming conditions remain stable, Nagel said Germany’s economy could still grow by 0.5% in 2026, helped by stronger-than-expected developments through March.