Dutch international: Middle East war threatens European Central Bank's "good position"

Carsten Brzeski of ING Bank International stated that the conflict in the Middle East is threatening the European Central Bank's previously declared "good position." With soaring energy prices, any discussions about rate cuts are no longer on the table. He mentioned that the ECB's assessment may be influenced by their experience of mistakenly interpreting the impact of energy prices in 2022 as temporary. However, Brzeski pointed out that the current situation is clearly different. "At this stage, the risk of a wage-price spiral seems small." Nevertheless, if a scenario of "prolonged war" arises, the European Central Bank may be forced to take action, leading to one or two rate hikes. ING Bank International predicts that the ECB will not adjust rates at the meeting on March 19, and also does not expect the mention of a "good position" again. Instead, the central bank may use hawkish language to curb inflation expectations and show readiness to raise rates when necessary.