European Central Bank board member Nagel: Facing the impact of war may "require action"

European Central Bank board member Joachim Nagel has stated that the ECB may have to deal with the economic challenges brought about by the conflict in the Middle East. The German central bank chief said in a Bloomberg TV interview on Tuesday, "This energy supply shock is more sustainable, so we are deviating from the baseline scenario." He added, "This means that we may have to take action." When asked if this could mean raising borrowing costs at the June monetary policy meeting, Nagel stated that he and his colleagues will make decisions based on data, but the likelihood of price pressures spreading is increasing. "We see the possibility of inflation intensifying everywhere," he said, "this is something we have to consider, and we will do so at the next meeting." The ECB has already signaled that it will consider raising interest rates as the rising energy costs from the war are pushing inflation further above its 2% target. However, some officials are still urging caution, as the increase in oil and gas prices could drag down economic activity, thereby lowering the risk of second-round effects.