The European Central Bank is “highly vigilant” to rising inflation risks due to the Iran war and will act as needed to prevent higher energy costs spilling over into prices more broadly, Governing Council member Joachim Nagel said.

While the medium-term impact of the conflict on inflation “remains difficult to assess” and the ECB’s wait-and-see approach is intended to provide greater clarity, the Bundesbank president stressed that policymakers are ready to respond.