European Central Bank Governing Council member Joachim Nagel has stated that the ECB must remain vigilant about inflation risks and maintain policy flexibility.

Reiterating his stance from earlier in the week, the Bundesbank President said on Friday at an economic conference in Aix-en-Provence, France, that an end to the conflict in the Middle East cannot be taken for granted.

Nagel noted that the current situation remains highly volatile, pointing out that the recent drop in oil prices was unexpected by the market. "We should be vigilant, keep an open mind, and preserve our policy options for whatever may come. I think this is the best we can do right now, which is to stick to the meeting-by-meeting approach," he said.

Earlier this week, ECB officials concluded their annual forum in Portugal without reaching a clear consensus on whether further interest rate hikes are still necessary. Last month, the ECB raised borrowing costs, becoming the first central bank among G7 nations to hike rates in response to the conflict involving Iran.

Nagel commented, "Our action in June was, to some extent, a necessity. All the data and forecasts available at that meeting gave us reason to believe that inflation was still too high, even under a more benign scenario."

Also speaking at the forum, ECB Governing Council member and Central Bank of Ireland Governor Gabriel Makhlouf emphasized that the ECB has an "unwavering determination" to achieve its 2% inflation target.