ECB minutes from March meeting confirm hawkish pivot in World Economy News 17/04/2026 At the last meeting, one month ago, the ECB was already sounding more alarmed about the inflationary risks stemming from the war in the Middle East and made a clear hawkish pivot. The just‑released minutes reinforce this shift and portray an ECB in no hurry to react. In the good old days, the central bank would have called this approach ‘being vigilant’. Here are some of the highlights: Base case too benign. “It was argued that the baseline projection for growth could still be seen as too benign, especially since the war could precipitate non-linear effects on growth.” Accentuate the positives. “A diversion of tourism from the Middle East to the euro area could boost the economy, while the latest trade deals with India and Australia could support growth over the longer term.” Overall risks to the growth outlook tilted to the downside, and to the upside for inflation. “Members assessed that the risks to the growth outlook were tilted to the downside, especially in the near term. The war in the Middle East was a downside risk to the euro area economy, adding to the volatile global policy environment.” Stronger pass-through than in 2022? Really? “It was argued that the pass-through from higher energy prices to goods inflation might be stronger than had been assumed in the baseline projections. In addition, some prospective fiscal support measures in response to the shock could put upward pressure on inflation.” Too optimistic on wage growth? “On the other hand, it was argued that the upward revision to the staff projection for wage growth seemed somewhat surprising given the slowing wage growth in the fourth quarter of 2025, the recent downward revision of the ECB wage tracker for 2026, the cooling labour market and weaker expected economic growth due to the energy price shock.” Inflation outlook fundamentally changed. “Starting with the inflation outlook, the war in the Middle East had fundamentally changed the outlook and also made it significantly more uncertain.” On 2022 vs 2026. “Overall, although memories of the 2022 shock were still fresh, the current situation was clearly distinct from 2022 and it was important to recognise the differences between the two episodes.” All in all, the minutes reflect the ECB’s hawkish pivot at the last meeting but also illustrate that the ECB is in no rush to act. 2026 is not 2022, or is it? Looking ahead, the next ECB meeting is already scheduled for two weeks from now. Recent comments by ECB officials suggest that the ECB, like so many others, has gradually shifted its base case scenario, even though there won’t be an official update to the staff projections at the next meeting. The benign scenario is clearly outdated and the stagflationary impact of the higher energy prices and potential supply chain disruptions is growing by the day. Financial markets are still pricing in aggressive ECB rate hikes in the course of this year. Obviously, nothing is impossible these days. However, it’s pricing that seems to follow the 2022 playbook and the assumption that the ECB will be mainly driven by the idea that it reacted too late to surging inflation in 2022. I tend to disagree. Back in 2022, the global economy was emerging from lockdown with healthy balance sheets and an almost unstoppable consumer appetite to go out and spend – the perfect breeding ground for fast-spreading inflation. This time, the inflationary impact of