ECBs Stournaras is on the wires saying:

• ECB would react to a 2nd round of price effects from oil shock
• she conflict in Middle East be protracted, then ECB March baseline scenario is a risk
• Longer or may mean baseline no longer holds and makes a stagflation more likely.

Here’s a roundup of recent ECB commentary, dominated by the Middle East war and its inflationary implications:

Christine Lagarde — President

At the March 19 policy meeting, the Governing Council held rates unchanged, noting the Middle East war has made the outlook significantly more uncertain, creating upside inflation risks and downside growth risks. Then, at the March 25 “ECB and Its Watchers” conference, Lagarde signalled policymakers stand ready to hike rates even if the expected inflation jump proves temporary, saying that if the shock gives rise to a large but not-too-persistent overshoot of target, “some measured adjustment of policy could be warranted.” She also stressed the ECB would not allow a repeat of the 2022 inflation episode.

Luis de Guindos — Vice-President

Speaking in Tallinn on March 26, de Guindos said the ECB is “closely monitoring” the economic effects of the Iran war and reaffirmed the bank is “unwavering” in its commitment to the 2% inflation target, adding that the data-dependent, meeting-by-meeting approach allows the ECB to respond in an agile manner to the evolving outlook

Philip Lane — Chief Economist

At the ECB Watchers conference on March 25, Lane highlighted companies’ price-hike expectations and wages for new hires as key inflation indicators the ECB will be closely watching as it assesses whether the energy shock feeds through into broader price pressures.

Isabel Schnabel — Executive Board

Schnabel delivered a guest lecture at the University of Zurich on March 28, with slides published on the ECB’s website. She has broadly been aligned with the hawkish pivot narrative; the ECB’s institutional memory of the 2022 energy crisis and the discrediting of “team transitory” means the bank will talk hawkish even if the energy shock proves short-lived.

Piero Cipollone — Executive Board

Cipollone participated in a panel on “The banking system and today’s geopolitical challenges” in Naples on March 28, and also delivered an introductory statement before the European Parliament’s economic committee. His focus has been on the digital euro and European financial integration.

Overall ECB tone: The institution has made a clear hawkish pivot. The baseline scenario projects headline inflation at 2.6% in 2026, 2.0% in 2027, and 2.1% in 2028, with growth revised down to 0.9% in 2026 — though many officials have noted those projections are already outdated given energy prices have moved well above the cut-off assumption