European Central Bank must respond to Iran war inflation, says EU economy chief

European Union economy chief Valdis Dombrovskis stated on Friday that the European Central Bank will need to respond to rising inflation in the bloc following the energy price shock caused by the ongoing Iran war.

ECB independence respected

“It’s clear that the ECB will have to respond to the increase in inflation,” Dombrovskis told reporters in Nicosia, where EU economic ministers had gathered for talks. He emphasized, however, that the ECB remains independent in making its monetary policy decisions. His remarks came a day after the European Commission lowered its growth outlook and raised its 2026 inflation forecast, warning that the eurozone economy would slow sharply while facing its fastest price growth since 2023 due to higher energy costs. Economists and markets now expect the inflation shock to push the ECB toward a rate hike at its June policy meeting.

Calls for short-term measures and fiscal flexibility

Dombrovskis reiterated calls for the EU to reduce its dependence on fossil fuels, while Eurogroup President Kyriakos Pierrakakis expressed confidence in the bloc’s economy but said short-term measures are needed to contain the impact of rising prices. “We shouldn’t allow this energy crisis to metastasize,” he said. EU ministers broadly agreed that any government support should remain temporary. Spain and Italy are seeking greater flexibility under the bloc’s fiscal rules to allow additional support measures. Austrian Finance Minister Markus Marterbauer said the situation underscored the need for coordinated action. Türkiye, which has also faced energy price pressures from the regional conflict, continues to advocate for diversified energy supplies and regional stability.