European Central Bank policymaker Martin Kocher said the institution has not yet detected second-round inflationary effects stemming from the U.S.-Israeli war on Iran, while underscoring continued vigilance toward indirect price pressures linked to the conflict.
In comments published on Wednesday, Kocher - who also serves as governor of Austria's central bank - stressed the bank's focus on how the war in the Middle East might filter into broader price dynamics. "At the moment we are paying particular attention to the indirect price effects of the war in the Middle East and possible second-round effects. We currently see no second-round effects, but must also align our monetary policy with inflation expectations," he told the German financial newspaper Börsen-Zeitung.
Kocher described the situation as one of heightened uncertainty because the intensity of the conflict is shifting over time. He warned that the outlook could become more challenging if the Iran war persists. "Therefore we are ready at any time to deploy monetary policy measures, should that be necessary," he said.
On the economic resilience of the euro area, Kocher said the bloc is navigating the current phase with relative robustness, while cautioning that a prolonged conflict would increase difficulty for policymakers and markets. He also pointed to medium- and long-term inflation expectations as a stabilizing signal, saying they remain well anchored and reflect confidence in the determination of monetary policy.
The remarks combine a current assessment - no observed second-round effects to date - with an explicit readiness to respond if indirect price developments or inflation expectations change. Kocher tied that preparedness to the uncertain trajectory of the conflict and to the potential for longer-term pressure on price dynamics if hostilities continue.
Context and implications
Kocher's comments reflect the ECB's monitoring of conflict-driven price channels while signaling that, for now, the bank does not see a feedback loop from higher prices to broader inflation expectations. The statement balances reassurance about current inflation dynamics with a clear warning that the central bank remains prepared to adjust policy if conditions warrant.