Bundesbank President Joachim Nagel is delivering a message that markets don’t particularly want to hear: even if the Iran conflict wraps up soon, the price damage is already baked in.
The numbers tell the story
Since military actions by Israel and the US against Iran began, crude oil prices have surged over 10%. Natural gas prices have jumped approximately 60%.
In remarks dating back to March 5, 2026, Nagel stated plainly that sustained elevated energy prices would lead to higher inflation and weaker economic activity in the euro area.
By May, Nagel had sharpened his tone further. He indicated that the European Central Bank is prepared to act, including possible interest rate adjustments, if inflation risks stemming from the conflict persist.
