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ECB Signals Readiness to Act on Middle East Energy Shock

The European Central Bank may need to take policy action in response to persistent energy price pressures from Middle East tensions, according to Governing Council members Joachim Nagel and Francois Villeroy de Galhau. The Bundesbank president said the energy supply shock is proving more durable than initially expected, pushing the ECB away from its baseline economic scenario. Officials cautioned that price stability could face threats if the regional conflict intensifies further. The energy shock is already weighing on eurozone growth and intensifying inflation concerns across the region. France's economy in particular is showing signs of strain from the geopolitical disruption, according to central bank surveys of business activity. Policymakers indicated a decision on potential monetary policy adjustments could come as soon as June, following continued economic monitoring.