European Central Bank rate hikes increasingly likely due to Iran war, says Nagel
Tech European Central Bank rate hikes increasingly likely due to Iran war, says Nagel The European Central Bank spent the better part of two years cutting rates. Now, one of its most influential voices is suggesting the next move might be in the opposite direction. Bundesbank President Joachim Nagel has warned that the ECB is increasingly likely to raise interest rates as the Iran war drives energy prices higher across Europe. The energy price problem, again ECB chief economist Philip Lane has echoed Nagels concern, stating that a global oil shock resulting from the Iran war may necessitate rate hikes to prevent energy-related inflation from bleeding into wages and broader price levels. The ECBs deposit rate has sat at 2% since June 2025, a level policymakers reached after months of gradual cuts designed to support a sluggish eurozone economy. Market futures have already started adjusting. Traders are now pricing in one to two 25-basis-point rate hikes through the remainder of 2026. Thats a meaningful shift from just weeks ago, when the consensus still leaned toward rates staying flat or even drifting lower. Caught between two bad options The ECB itself has acknowledged a shift toward “upside risks to inflation” alongside “downside risks to growth.” Nagel‘s public comments suggest he’s firmly