ECB policymaker Wunsch says June discussion to be quite easy if US-Iran conflict remains

• Discussion on policy setting in June “will be quite easy” if Middle East conflict remains unresolved
• If a peace deal is confirmed just before the meeting, it will be part of the discussion
• However, we won’t know whether it will last or be credible
• But if a peace deal is confirmed, any policy talk “might be a bit less easy”
• There is still a case to raise interest rates if so, but just a bit less strong
• At some point, we cannot let the market do all the lifting; we need to take a stance
• We may end up acting too late if needing to wait to check all the boxes in a meeting-by-meeting approach
• I don’t have very strong feelings about further moves after June

The full transcript can be found here (may be gated).

The remarks here aren’t surprising given Wunsch’s more hawkish stance in general. As a reminder, he mentioned that he was “slightly in favour of hiking” already in April. But ultimately, he backed the consensus decision among his peers as he viewed that there were pros as well as cons in acting then.

But this time around, his comments clearly indicate that the ECB will hike rates regardless this month. The only question is what will come after that.