Full report here ECB’s Schnabel reiterated that ECB is not done tightening yet.
She’s one of the ECB’s most influential voices, so her comments carry significant weight because they often signal where the policy debate inside the Governing Council is heading
Schnabel said that based on current conditions, further rate hikes will likely be needed to bring inflation back to the ECB’s 2% target over the medium term, though the pace and size of future moves will depend on developments in the Middle East, growth, and incoming inflation data, which still points to the next rate hike coming after the summer if the data supports such a move. While the US-Iran MoU and much lower oil prices have improved the near-term outlook, she warned this is not enough to justify complacency. She said energy prices remain elevated relative to pre-war levels, and longer-dated energy contracts still point to persistent cost pressures (debatable).
She highlighted ongoing risks from disrupted shipping through the Strait of Hormuz, higher insurance costs, damaged energy infrastructure, and the need to rebuild strategic reserves and refill European gas storage ahead of winter. Schnabel stressed that the ECB is increasingly worried about second-round inflation effects. She said the initial energy shock is already spilling into broader inflation, with non-energy goods and services showing upward pressure as firms begin passing higher input costs to consumers.