European Central Bank Governing Council member Gabriel Makhlouf spoke in Dublin on Tuesday, downplaying the idea that a US‑Iran peace deal would instantly lift euro‑area inflation. He noted that the shock from the conflict could linger, saying markets will need time to adjust to evolving geopolitical and economic realities.

Makhlouf highlighted that supply chains and energy prices remain the main levers under pressure. Even after hostilities cease, restoring logistics and stabilizing fuel costs will take months, he cautioned. The ECB’s view underscores that inflation dynamics will still be influenced by external shocks, reinforcing the need for vigilant monitoring by market participants across financial markets worldwide to maintain pricing stability during the next cycle.

For investors, the takeaway is clear: expectations of a swift inflation reset should be tempered. Market participants must monitor how quickly supply chains normalize and whether energy prices subside, as these factors will dictate euro‑zone growth trajectories. Failure to adjust assumptions could expose portfolios to prolonged volatility in bond yields and currency moves that could erode returns in the near term again.

The ECB’s caution signals that the monetary policy team will likely keep a tight stance until clear evidence shows supply shocks have eased. Central bankers will watch energy price trends closely, particularly natural gas and oil, to decide whether tightening can be maintained without triggering a recession. This approach aims to balance inflation control with growth stability for the euro‑zone today.