ECB should not rush rate change even if Iran war could alter outlook

ECB policymakers advocate patience amid conflict and energy cost concerns as Simkus emphasises calm approach despite market volatility

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The war in Iran and soaring energy prices could fundamentally alter Europe's economic prospects but the European Central Bank (ECB) should take its time to reassess policy and stay on its present course for now, two policymakers said on Tuesday.

Markets have been pricing rate hikes from the ECB over the past week on the premise that surging energy costs will quickly feed into consumer prices and the bank will want to prevent such price pressures perpetuating rapid inflation.

Gediminas Simkus, Lithuania's central bank chief, argued that the ECB will not reassess policy with every market move given exceptional volatility and needs to stay calm, taking stock at its next meeting on March 19.

"If you start thinking about monetary policy in the morning, you may end up with very different thinking in the evening," Simkus said, in response to crude oil prices surging to close to $120 per barrel on Monday before falling to $90 on Tuesday.

"As for the coming meeting, I would say we of course will discuss and try to assess all the possible implications of the events in Iran or to the European economy, but I would say, for the moment, we should stay our course," Simkus told a conference in Vilnius.