ECB’s Müller: The longer the war lasts, the more likely that we will have to respond
Oleh Sagar Dua
Diperbarui: 27 Mar 2026
ARTIKEL POPULER
European Central Bank (ECB) Governing Council member Madis Müller said in an interview with Econostream that the central bank might need to wait for the release of second-round inflation effects before making any monetary policy adjustment.
European Central Bank (ECB) Governing Council member Madis Müller said in an interview with Econostream that the central bank might need to wait for the release of second-round inflation effects before making any monetary policy adjustment.
Remarks
ECB might not need to wait for fully visible second-round effects before increasing rates.
Once energy prices have remained elevated for several weeks, one can already be reasonably confident that second round effects are likely.
I would not be surprised if by the next policy meeting, elevated energy prices were already showing up more broadly in the prices of other goods and services.
If that happens, we need to discuss whether that is already enough to justify an action.
ECB should monitor the situation, look at incoming data and be ready to act in a timely way.
If we decided to act at a particular meeting, that doesn't automatically predetermine the next step.
Measured steps are normally preferable as they come with less risk of disrupting the markets.
We are in a better position today to respond than we were in 2022.
ECB would get another labour market report in April, we will be looking at unemployment, the ECB wage tracker, wage developments and broader inflation developments before the next meeting.
The longer the war in the Middle East lasts, the more likely that we will have to respond.
Market reaction
As of writing, EUR/USD trades 0.15% lower to near 1.1510; however, the influence appears to be the outcome of Middle East conflicts.
ECB FAQs
The European Central Bank (ECB) in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy for the region. The ECB primary mandate is to maintain price stability, which means keeping inflation at around 2%. Its primary tool for achieving this is by raising or lowering interest rates. Relatively high interest rates will usually result in a stronger Euro and vice versa. The ECB Governing Council makes monetary policy decisions at meetings held eight times a year. Decisions are made by heads of the Eurozone national banks and six permanent members, including the President of the ECB, Christine Lagarde.
In extreme situations, the European Central Bank can enact a policy tool called Quantitative Easing. QE is the process by which the ECB prints Euros and uses them to buy assets – usually government or corporate bonds – from banks and other financial institutions. QE usually results in a weaker Euro. QE is a last resort when simply lowering interest rates is unlikely to achieve the objective of price stability. The ECB used it during the Great Financial Crisis in 2009-11, in 2015 when inflation remained stubbornly low, as well as during the covid pandemic.
Quantitative tightening (QT) is the reverse of QE. It is undertaken after QE when an economic recovery is underway and inflation starts rising. Whilst in QE the European Central Bank (ECB) purchases government and corporate bonds from financial institutions to provide them with liquidity, in QT the ECB stops buying more bonds, and stops reinvesting the principal maturing on the bonds it already holds. It is usually positive (or bullish) for the Euro.
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