European Central Bank Governing Council member and Bank of Finland Governor Olli Rehn stated on Tuesday that the conflict involving Iran will elevate inflation this year, although policymakers cannot be certain about the direction of borrowing costs. Rehn remarked, "Interest rate decisions are not predetermined. While an increase in overall inflation this year is unavoidable, the impact of the conflict on medium-term inflation remains unclear." He added that the ECB "will closely monitor developments in the Middle East conflict and its spillover effects on the economy." ECB officials are still considering how to respond to the surge in energy costs triggered by the Middle East conflict. The ECB is scheduled to announce its next interest rate decision on April 30. Markets widely expect the ECB to hold rates steady this month, with potential rate cuts later this year. Earlier this week, oil prices fluctuated amid expectations of peace talks between the US and Iran. Rehn noted that uncertainty persists regarding when the conflict will end, but damage to energy production infrastructure "is already so severe that even if the most intense phase of the conflict is over, repairs will take a long time." The situation in the Middle East continues to develop, and several ECB policymakers have recently made frequent statements regarding the policy outlook. Some policymakers have explicitly kept the option of rate hikes open. ECB Governing Council member and Bank of Estonia Governor Madis Müller pointed out that if the Middle East conflict continues to drive up oil and gas prices, a rate hike at the April meeting cannot be ruled out. Bundesbank President Joachim Nagel also stated that if the conflict leads to a sharp rise in eurozone inflation, the ECB would retain the option to raise rates at its next meeting. ECB President Christine Lagarde has pledged to act decisively and swiftly if necessary. Meanwhile, a larger number of officials prefer a cautious wait-and-see approach. Bank of France Governor François Villeroy de Galhau said it is still too early to discuss the specific timing of action. National Bank of Belgium Governor Pierre Wunsch indicated that if the Middle East conflict does not end by June, the ECB may have to take action, but he also urged markets to remain patient while officials fully assess the economic impact of the conflict.