ECB Policymakers Warn of Higher Inflation Risks Amid Soaring Gas Prices

European Central Bank (ECB) policymakers have expressed concern about the potential for higher inflation in the euro zone, citing rising natural gas costs as a particular worry. ECB board member Isabel Schnabel stated that recent energy price developments are concerning, with gas prices reaching four-year highs.

The current market price of December gas futures is over €83 per megawatt hour, well above the ECB's baseline projection of €60.1 and its adverse scenario of €77. Brent crude oil prices have also risen to $107 a barrel, exceeding the ECB's adverse scenario assumptions.

ECB policymakers, including Slovakia's central bank chief Peter Kazimir and Latvian central bank chief Martins Kazaks, have suggested that inflation risks are tilted towards the upside, and that interest rates may need to be raised further. However, some policymakers have cautioned against raising interest rates too quickly, arguing for a more measured approach.