Nagel: ECB will decide at next meeting if action needed on Iran

After showing some signs of resilience at the start of 2026, the UK construction sector recorded an accelerated downturn in output levels during the latest survey period. The ...

Ms Schnabel started her presentation by noting that, since the Governing Council’s previous monetary policy meeting on 17-18 December 2025, geopolitical uncertainty had spiked and trade policy uncertainty had rebounded briefly to summer 2025 levels. Stock market volatility had, however, edged up only slightly, far less than during previous stress episodes, while bond market volatility had hardly reacted to the risk shocks and had continued its downward trajectory. Investor risk appetite had also remained largely unaffected by the recent turbulence, and risk appetite indices for the euro area and the United States stood near their highest level since the global financial crisis of 2008. Two factors explained the overall contained market reaction. The first factor had been a change in the reaction to risk-off shocks, with investors appearing to be increasingly looking through the noise. Whereas the US tariff announcement on 2 April 2025 had triggered sharp corrections across asset markets as investors rebalanced away from riskier and US dollar-denominated assets into safer non-US dollar-denominated ass ECB ACCOUNTS SAYS IT WAS SEEN AS HELPFUL FOR COMMUNICATION TO ANCHOR POLICY EXPECTATIONS AROUND CURRENT LEVELS. ECB ACCOUNTS SAYS THE VIEW WAS EXPRESSED THAT INFLATION RISKS WERE TILTED TO THE DOWNSIDE, OR HAD BEEN MOVING IN THAT DIRECTION SINCE THE DECEMBER MEETING ECB ACCOUNTS SAYS THERE WAS ALSO A RISK THAT GEOPOLITICAL TENSIONS IN THE MIDDLE EAST COULD LEAD TO A FURTHER INCREASE IN ENERGY PRICES.