WSJ What’s News How One Central Banker Is Sizing Up the Iran War
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Apr 7, 2026 Pierre Wunsch, governor of the National Bank of Belgium and a European monetary policymaker, talks about how the Iran war is reshaping central-bank decisions. He discusses inflation risks from energy disruptions. He compares current shocks to 2022 and lays out conditions that could force rate hikes in June.
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Iran War Is The Overriding Monetary Uncertainty
- The Iran war is the dominant uncertainty for European monetary policy and could force rate hikes if unresolved by June.
- Pierre Wunsch says supply shocks are hardest to manage and if not resolved by June they'll probably have to hike rates.
Less Direct Exposure But Faster Second‑Round Risks
- Europe is less exposed to the current shock than 2022 because bottlenecks eased, but second‑round effects could hit faster.
- Firms may raise prices quickly and fiscal responses that absorb costs risk rating downgrades, Wunsch warns.
Use Communication And Small Hikes To Curb Second‑Round Inflation
- Central banks should signal intent and act to control indirect inflation effects rather than the direct energy shock.
- Wunsch suggests small hikes and communication now, and demand reduction measures if the shock persists.