By David Barwick – FRANKFURT (Econostream) – European Central Bank Governing Council member Madis Müller on Friday said the ECB must remain alert to inflation risks from the war in Iran but does not yet have a clear basis for raising interest rates.

Müller, who heads Eesti Pank, told Bloomberg that policymakers were in a better position than in 2022 and therefore did not need to rush.

“Thanks to the starting point we can perhaps be a little bit more patient and we don’t need to rush action,” Müller said. “But of course we don’t want to be hesitant and fall behind the curve.”

He said there was so far little evidence that the energy shock was feeding more broadly into prices, arguing that this made it hard to justify an immediate move.

“We don’t have much hard evidence of second-round effects,” he said. “So it’s difficult to argue that there’s an obvious case to raise rates.”

At the same time, Müller cautioned against assuming that the shock would prove temporary and could simply be ignored.

“It would be dangerous” to assume an energy shock will be temporary and can be completely looked through, he said, while adding that the ECB had to be “vigilant” and take seriously the possibility of broader price pressure.

Müller also said policymakers should not necessarily wait until second-round effects had already appeared in the data.

“If we have enough confidence that this is likely to happen, we should act,” he said.

Still, he suggested that the April meeting was unlikely to provide much additional evidence, saying the ECB would have more information and greater clarity by mid-June.

He also said he did not regard market pricing for at least two rate hikes in 2026 as plainly implausible, saying he did not “have a view of market expectations being completely unreasonable.”