FRANKFURT, (Reuters) – The European Central Bank needs to hold off until the end of the current stimulus program. This is because the conflict in Ukraine has raised uncertainty. Also, the bank still requires evidence that the inflation rate will remain at the target level. Fabio Panetta, an ECB member said Monday.

With rising price pressures, the ECB prepared markets to receive a more moderated stimulus package at its March 10, 2010 meeting. But the conflict in Ukraine tossed those plans into disarray.

Conservatives believe that rapid inflation is a reason to sell bonds faster, but policy hawks like Panetta argue for patience, given the uncertainty of economic costs associated with the war and the sanctions.

Panetta stated in a speech that “it would be foolish to move further before we have strong confirmation” that actual and expected inflation are re-anchored at 2% in a world with tighter financial conditions.

He said, “In such an environment it would not be wise to pre-commit to future policy actions until the fallout of the current crisis becomes more clear.” The danger of inflation being entrenched appears to be contained right now.

A divergent view about the longevity of inflation is at the heart of this debate.

While price growth exceeds the ECB’s goal, the policymakers differ on how to address the underlying price pressures and in particular the state of employment market.

Panetta countered, saying the labor market “is not looking too tight”, while Isabel Schnabel, board member, said last week that the bloc had the strongest labour market in history.

Panetta warned that “if we give in to false signals and react to an increase in inflation which might not last, it could be detrimental to the recovery.” We should try to support the recovery by being light-hearted and taking cautious, but not rash steps.

Panetta said that the ECB is ready to support financial stability and confidence by taking any necessary measures.