By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Joachim Nagel on Wednesday said the new flare-up in the conflict with Iran had made the ECB’s July monetary policy decision unclear.

Nagel, who heads the Bundesbank, said, “After today’s Iran news, we’re back where we began.”

He said he had been more optimistic earlier in the week, with oil prices having retreated, Germany’s cabinet having approved its 2027 budget and industrial data having improved.

"But I think some of you have seen the news this morning," Nagel said. "Now I think we are back to square one. I still hope things will develop differently, but the latest news is that peace talks have stopped, and Trump has announced he will halt trade with Spain. Yes, it is strange. And energy prices are rising again."

Nagel said he did not know what decision would be made at the ECB’s July monetary policy meeting.

“Is a further rate increase possible? Yes. Is it possible to keep rates unchanged? Also yes, or we could take other measures,” he said.

It was appropriate for the ECB to retain its meeting-by-meeting approach in the current environment, Nagel said.