By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Pierre Wunsch would support another 25bp rate hike if inflation data continued to disappoint, but saw no need to move quickly if the evidence remained ambiguous.

“We had a not-so-nice reading of services inflation,” Wunsch told Reuters in an interview published Friday, referring to the rise in Eurozone services inflation to 3.5% in May from 3.0%.

“If we see more of that, maybe you want to hike another 25bp to be on the safe side, and then you can cut rates when you start seeing the dynamics in the other direction,” he said.

Wunsch, who heads the National Bank of Belgium, indicated a preference for acting rather than waiting if the inflation data failed to improve, according to Reuters.

“If the data is not going in the right direction, I would plead for a second hike and not for waiting,” he said. “But if what we see is ambiguous, I don’t see a need to rush.”

The agreement involving Iran and moderating wage growth could support the argument that the ECB should have left rates unchanged last week and looked through the energy-driven rise in inflation, Wunsch acknowledged.

He had also warned Governing Council colleagues about the possibility that an oil glut within a year could drive crude prices below their prewar levels.

Wunsch nevertheless defended last week’s increase, which was decided while inflation was rising and uncertainty remained elevated.

“Have we made a mistake? No,” he said. “We have hiked 25bp when inflation is going up, so real rates have actually declined slightly, and we can cut at some point if need be.”

Wunsch also advocated clearer conditional guidance from the ECB, warning that its standard commitment to decide meeting by meeting on the basis of incoming data could eventually cease to convey useful information.

“I would have been comfortable saying, for instance, ‘We will probably have to do more if the conflict doesn’t end soon,’” he said. “Now it seems to be ending.”