The war in Iran and the blockade of the Strait of Hormuz have shaken global energy markets and evoked memories of 2022, when Russia’s attack on Ukraine significantly exacerbated the energy crisis of 2021/22. In the current issue of the Monthly Report, Bundesbank experts examine both crises and show that while there are parallels there are also significant differences.

In spite of many burdens, the German economy grew more strongly than expected at the beginning of 2026 – partly because industry proved to be quite resilient. However, the labour market continued to deteriorate and the consequences of the war in Iran are clouding the outlook for the German economy in the second quarter.

Interest rate hikes will become increasingly likely if the inflation picture does not change fundamentally, Bundesbank President Joachim Nagel said in an interview with Germany’s “Handelsblatt” newspaper, pointing to the rising inflation rates in the euro area. Nagel used the interview to talk about current prices, the role of monetary policy and the digital euro.

Inflation this year is going to be noticeably higher than we were expecting it to be before the war in the Middle East broke out, Bundesbank President Joachim Nagel told the RedaktionsNetzwerk Deutschland (RND) media network in an interview. How high inflation turns out to be mainly depended on how long the Strait of Hormuz remained blocked, he added. If the outlook doesn’t improve noticeably, I would expect us to raise interest rates in June, Nagel said, pointing to the geopolitical situation and rising energy prices.