ECB Policymaker Nagel: Prices May Remain Elevated Long-Term Even If Iran Conflict Ends

On June 13, ECB policymaker and German central bank governor Nagel expressed his view that prices could remain elevated for an extended period even if the Iran conflict resolves quickly. According to Nagel, supply chains have fundamentally shifted and risk premiums may increase, making a return to pre-conflict price levels unlikely. He specifically referenced premium costs for shipping through the Strait of Hormuz.

Nagel stated he "almost doubts" the world will ever return to its pre-conflict state, as uncertainties beyond the immediate conflict will continue to influence economic conditions. While short-term rate hikes increase refinancing costs, Nagel emphasized that maintaining price stability remains the central bank's greatest contribution to long-term economic health.