By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Joachim Nagel said on Tuesday that the economic outlook was moving away from the ECB’s baseline scenario and that the central bank might need to act.

Nagel, who heads the Deutsche Bundesbank, told Bloomberg TV that the energy supply shock stemming from the Middle East conflict was now “more persistent.”

“We are moving away from the baseline scenario,” he said. “This is a fair description of where we are at the moment.”

The ECB would take a decision in June based on data, he said, adding that there was a “higher probability now that we are now away from the baseline scenario, and that means that maybe we have to do something.”

Asked about market expectations of at least two interest rate hikes in 2026, Nagel declined to comment other than to say that speculating about specific moves and timing was not helpful.

Whether the Eurozone faced a broader inflation problem would depend on how long the shock lasted, he said, noting that “[t]he probability is rising that we will see more inflation everywhere and this is something we have to take into consideration, and we will do this in our next meeting.”

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