European Central Bank Governing Council member Joachim Nagel has stated that, given the ongoing uncertainty surrounding the Middle East situation and its impact on inflation, he is keeping an open mind regarding the necessary actions at the next two monetary policy meetings.

Nagel, who also serves as President of the Bundesbank, noted that the decline in oil prices was "absolutely unexpected," but cautioned that the sustainability of this drop, as well as the final outcome of a potential US-Iran peace agreement, remains to be seen.

"I will not speculate on future interest rate hikes," Nagel said on Wednesday at an event in Sintra, Portugal, where the ECB is holding its annual forum. He stated, "For the July and September meetings, I will keep all options open," describing the situation as "an open competition."

Following the ECB's first interest rate hike of 2023 in June, policymakers are examining whether and when further policy tightening might be required to ensure inflation returns to the 2% target. Eurozone consumer price data for June is scheduled for release later on Wednesday, with economists forecasting a slight dip in the inflation rate to 3% from 3.2%.

Despite progress in the Iranian peace process, which has triggered a sharp drop in oil prices, markets still anticipate one more rate hike this year.

Officials believe the damage caused by the conflict is sufficient to keep price pressures elevated for a longer period, an outlook that justified last month's rate increase. Regarding plans for July and September, their public comments have been more measured.