European Central Bank Governing Council member and Bundesbank President Joachim Nagel stated on Thursday that it is currently inappropriate to provide forward guidance on future interest rate paths, as policymakers must retain flexibility. Speaking during the International Monetary Fund's spring meetings, Nagel noted that decision-makers still lack sufficient information to determine whether surging energy prices will keep inflation elevated over the long term, a scenario that may require a policy response. He emphasized, "We need to keep our options open; it is not yet the time to pre-commit to a specific interest rate direction." The ECB is scheduled to hold its monetary policy meeting in two weeks. Market participants widely expect the deposit rate to remain unchanged, though policymakers have not ruled out the possibility of a rate hike under current conditions.

Nagel also pointed out that Germany's economic growth momentum has noticeably weakened due to the US-Israel-Iran conflict. The country's economic growth for this year is now projected to be approximately 0.3 percentage points lower than earlier forecasts. Previously, the Bundesbank had predicted 0.6% growth for 2026. German Finance Minister Lars Klingbeil also warned that the Middle East situation would have a "significant impact" on the German economy. He noted that although the German economy had just begun showing signs of recovery after years of stagnation, the conflict could disrupt this progress. "We were encouraged by the return to growth, but the conflict has dealt a major blow to this momentum," Klingbeil stated, emphasizing the need for reforms and structural policies to put the economy back on a growth path.

Nagel further observed that markets currently hold a relatively optimistic outlook regarding the Middle East situation, generally expecting the conflict to ease and energy prices to decline. However, he cautioned that if these expectations are not met, there could be spillover effects on financial stability. "The central bank's task is to ensure that any change in circumstances does not lead to shocks to the financial system," he said. Analysts suggest that, against a backdrop of unclear energy price trends and uncertain inflation paths, the ECB is likely to adopt a more cautious policy stance in the near term, avoiding premature signaling of future policy directions.