European Central Bank Governing Council member Joachim Nagel said the ECB must be prepared to respond to a range of inflation scenarios, as the situation in the Middle East continues to dominate the outlook for consumer prices.

The Bundesbank president said on Monday that a "sustained reopening" of the Strait of Hormuz, allowing energy shipments to return to normal, would help ease pressure, but a renewed escalation could create further disruptions and push oil and gas costs even higher.

"The future path of inflation will still depend to a large extent on geopolitics," Nagel said in Sorrento, Italy. "The high degree of uncertainty surrounding the inflation outlook requires us to remain flexible rather than do nothing. The Governing Council will continue to make decisions meeting by meeting, based on the data."

The ECB has already raised interest rates twice in response to the Iran war, and policymakers have not ruled out further action. Economists expect the ECB to deliver the final rate increase of this tightening cycle in December, lifting the deposit rate to 2.75%.

Nagel reiterated that the risks to the inflation outlook remain tilted mainly to the upside. He said that because European gas storage levels are low, gas prices are "particularly vulnerable to shocks," while damage to refining capacity has also driven up prices for related products.

At the same time, however, Nagel noted there are currently "no clear signs that inflation has passed through to pricing and wage setting." He said consumer inflation expectations also remain consistent with the ECB's 2% target.