By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Joachim Nagel on Tuesday said that euro area inflation would remain high for the moment, but he declined to endorse the need for more monetary policy tightening.

Nagel, who heads the Deutsche Bundesbank, told CNBC on the margins of the ECB Forum on Central Banking in Sintra, Portugal, “I believe there’s a probability that it [inflation] will stay on an elevated level. So, I think the energy price shock that started with that conflict in the Middle East is not over. It’s still in the system. So, I expect that the inflation rate will stay significantly above our target.”

Asked about what this meant for monetary policy and whether one or more rate hikes were still needed, he replied. “I think it is too early to make such a call. I think monetary policy has to remain vigilant.”

The June decision to hike was correct given the “clear picture” at the time of above-target inflation this year, he continued. “It will remain on a higher level for 2027 and it will come back in 2028 to our target.”

“Now we have to wait,” he said. The current situation was “very opaque” with regard to the situation in the Middle East, he said. It was not clear whether there was a stable peace yet, he said.

There were approximately 50 days left for the peace talks between the US and Iran, he noted, “and then we will see how reliable this whole situation is.”

The retreat of energy prices had been “a surprise, not only for me,” he said. “But now we have to wait – is it stable, what does that mean for the inflation picture in total? So, it’s still a very, let me say, opaque situation, and I will wait till I have a clearer picture what does that mean.”

The Governing Council would meet again in July and then have updated macroeconomic projections in September, he observed.

“And I will keep all the optionalities open,” he said. It was “too early to make this call,” he said when asked to confirm that July would bring a hold and September would be more live. “There can be a lot of things happening over the course of the next three weeks, so I guess we have to wait till we have all the information that are necessary to come to a conclusion.”

German economic growth rates were “not sufficient,” he said. “This is not enough. We can do much more.”