ECB Governing Council Has Adopted a Significantly More Hawkish Tone Since Outbreak of Iran Conflict
ResearchZEW Analysis Points to Interest Rate Hike by ECB
The tone of the communications by the European Central Bank (ECB) Governing Council has shifted markedly towards a more restrictive monetary policy stance. Since the escalation of the Iran conflict, public statements by council members have clearly been signalling a growing concern over new inflation risks. At the same time, the positions taken by the individual members show little divergence: those communicating their views publicly are largely speaking with one voice. An interest rate hike at the next ECB Governing Council meeting on 11 June 2026 appears therefore highly likely. These are the findings of an analysis by ZEW Mannheim, which evaluated the public statements of ECB Governing Council members.
“The escalation of the Iran conflict has completely reshaped the monetary policy debate in the eurozone within a matter of weeks. What we are seeing is not a gradual change in direction, but a rapid, hawkish change of course towards restrictive communication – and this with very little divergence in positions. If the Governing Council members are united in their language, the signal to the markets becomes particularly clear: The risk of a second round of inflation is being taken seriously, and the willingness to raise interest rates is there,” says Professor Friedrich Heinemann, head of the ZEW Research Unit “Corporate Taxation and Public Finance”.
More unity than during the Covid-19 pandemic
The public speeches of the ECB Council members are classified on a scale from more expansive monetary policy (-1, strongly ‘dovish’) to tighter policy (+1, strongly ‘hawkish’). Since the escalation of the Iran conflict, the score has risen from +0.2 to +0.63. Hawks advocate strict interest rate hikes to combat inflation, while doves are concerned about the negative effects of rate hikes and prefer relatively lower interest rates.
The narrow dispersion of the individual hawk–dove scores indicates a high level of consensus among the council members. This is in contrast to earlier periods, such as before the interest rate hikes during the pandemic, when the disagreement within the council was very visible. The more hawkish stance thus reflects a broad consensus rather than the views of a minority of council members.
“By speaking with one voice, the ECB strengthens its credibility and reduces uncertainty in financial markets. Ahead of a key interest rate decision, this is a strong indication that a policy move such as an interest rate hike is being seriously considered and is highly likely to be decided upon,” says Heinemann.
About the analysis
The analysis is based on a comprehensive corpus of speeches made by all members of the ECB Governing Council since 1998. Every six weeks, the arithmetic mean of the new speeches within the respective time window is calculated using an AI-based analysis. This yields the scores on the hawk–dove scale. The project is supported by the foundation Stiftung Geld und Währung.