Moving from observation to action? European Central Bank board member Nougarede called the April rate hike a "contingency".

European Central Bank board member and Bundesbank President Joachim Nagel said in a media interview that if the Middle East conflict triggers concerns about soaring inflation in the Eurozone, the European Central Bank will have the option to raise interest rates at the next monetary policy meeting. Due to the surge in energy prices caused by the Iran conflict, the European Central Bank has reintroduced the discussion on raising interest rates. Traders are closely watching the situation and speculating whether the first action will take place at the April meeting or the subsequent June meeting. Nagel pointed out that by the meeting on April 29-30, he and his colleagues will have sufficient information about the progress of the war and its economic impact to determine whether rate hikes are necessary. When discussing the possibility of a rate hike in April, he said, "It is indeed an option, but only one of many." He added, "I believe that by April we will have enough data to decide whether to take action or continue to wait. But we should not avoid this choice simply because we think it might be too early." ECB President Lagarde also stated on Wednesday that the 21-country eurozone central banks are prepared to take action at any meeting to ensure that inflation remains at the target level of 2%. The surge in oil and natural gas prices is undoubtedly a heavy blow for the eurozone, which relies on energy imports. Furthermore, the blockade of the Strait of Hormuz has cut off the supply of some chemical products, including fertilizers. Nagel emphasized that he and his colleagues will closely monitor signs of price increases beyond the energy sector and wage growth, which will indicate whether high inflation is entrenched in the Eurozone. He said, "In this situation, every day that passes increases the risk of inflation, especially from a monetary policy perspective. What concerns us the most is: how will medium to long-term inflation expectations evolve?" Currently, traders expect the European Central Bank to raise interest rates two to three times by the end of the year, bringing the policy rate to 2.50% or 2.75%.