Olli Rehn, Bank of Finland governor and European Central Bank Governing Council member, said the energy-price shock from the Middle East conflict has not yet produced broader second-round effects in the euro area. Wage growth remains moderate, and inflation expectations are anchored near the ECB’s 2% target, indicating that a wage-price spiral has not emerged. Eurozone inflation nevertheless rose from 2.9% in July to 3.3% in August, while oil climbed roughly 25% since the conflict began to trade above $90 a barrel. The pressure is linked to the conflict involving Iran and the near-complete blockage of the Strait of Hormuz, which carries approximately 20% of global oil and liquefied natural gas exports. Rehn has characterized the environment as a stagflationary shock, combining slowing growth with rising prices. In a Financial Times interview published September 1, he said the ECB needs to prepare for a prolonged conflict and sustained energy-price pressure. The ECB Governing Council will reassess the inflation outlook at its September 10 meeting, with market participants pricing in a potential rate increase to 2.5%, a shift from the easing cycle pursued before the conflict escalated.