world-economy

ECB Signals Readiness to Act on Iran Conflict Fallout

The European Central Bank may need to intervene as Middle East tensions threaten price stability across the eurozone, according to Governing Council member Joachim Nagel. The Bundesbank president said policymakers are monitoring inflation risks stemming from the conflict, particularly energy cost pressures that could ripple through broader economies. France's manufacturing sector is already showing strain, with company surveys indicating the geopolitical shock is dampening growth while intensifying inflationary headwinds. Nagel indicated the ECB will weigh whether to raise interest rates at next month's policy meeting, with the probability of hikes increasing if the conflict persists in driving up commodity prices. Central bankers remain "highly vigilant" to prevent elevated energy costs from becoming entrenched in wage-price dynamics across the bloc, he added.