European Central Bank Governing Council member Pierre Wunsch said he won't rush to react to the recent jump in oil prices stemming from Middle East conflict. Speaking in Brussels, the Belgian central banker emphasized policymakers need to assess the situation carefully before taking action. He noted that while higher oil prices could weigh on economic growth, they would likely have a net inflationary impact.

Wunsch said ECB officials are monitoring developments but want to avoid knee-jerk reactions to energy price movements. The escalating war in the Middle East has pushed oil prices higher and reignited inflation concerns. Some traders have already scaled back expectations for additional ECB interest rate cuts this year. Point72 economist Soeren Radde even suggested officials could now lean toward a rate hike.

Central banks typically look through one-off price shocks, but remain wary of risks to consumer inflation expectations after the 2022 price surge proved more persistent than initially expected. ECB President Christine Lagarde last week stressed the need to monitor elevated inflation perceptions. While most officials remain comfortable with current monetary policy settings, they emphasize maintaining "full optionality" for future moves given the uncertainty. Wunsch's Irish counterpart Gabriel Makhlouf said it's too early to draw conclusions, though geopolitical tensions will factor into discussions at the next policy meeting.