Middle East uncertainties are difficult to judge impact, the European Central Bank may "wait and see" on interest rate decisions in April.

According to informed sources, European Central Bank policymakers are leaning towards maintaining interest rates this month and are not yet conclusive on whether to take measures in response to the impact of the Iran conflict. The source stated that the current tightened financing environment temporarily helps stabilize inflation expectations, and raising interest rates may not significantly change market pricing. The European Central Bank is scheduled to hold a monetary policy meeting on April 29-30, and the data released before the meeting cannot clearly assess the specific impact of the conflict in the Middle East in the past two months on economic growth and supply chains, nor can it determine whether the prospect of inflation returning to the central bank's 2% target is materially affected. Additionally, with peace negotiations still ongoing, there is a possibility that the damage caused by the conflict can still be controlled. The source also mentioned that the European Central Bank has reacted belatedly to the record-high inflation caused by the Russia-Ukraine conflict in 2022, and was forced to quickly reverse policy after raising interest rates twice during the European debt crisis in 2011. These past experiences are all taken into consideration. A spokesperson for the European Central Bank refused to comment on this. Due to the impact of the conflict pushing up energy costs, the inflation rate in the eurozone's 21 countries rose to 2.5% in March, but how long this upward trend will last largely depends on the duration of the conflict. Meanwhile, several countries' governments and central banks have lowered their economic growth expectations, and businesses are preparing for a decline in end-demand. European Central Bank President Lagarde stated in an interview earlier this week that the central bank needs to remain "highly flexible" in interest rate decisions, but emphasized that there is currently no inclination to raise interest rates. However, investors believe that rate hikes are inevitable, with the market betting that the European Central Bank will raise rates twice this year, each by 25 basis points. The Managing Director of the International Monetary Fund, Kristalina Georgieva, stated in an interview on Wednesday that major central banks should refrain from raising interest rates impulsively to avoid harming economic output by tightening borrowing costs. Similarly, European Central Bank Executive Board member Isabel Schnabel stated that there is no rush for the central bank to make a decision on raising rates; and the Governor of the Bank of France, Francois Villeroy de Galhau, also emphasized that "making a decision in April is still premature."