ECB's Schnabel Calls for Higher Interest Rates Amid Inflation Concerns

European Central Bank (ECB) board member Isabel Schnabel believes that interest rates must be raised further to combat inflation risks. In an interview with Bloomberg News, Schnabel stated that at the current policy rate, inflation is unlikely to return to target over the medium term.

The ECB has already raised borrowing costs in June to prevent a war-fuelled rise in energy prices from spreading widely throughout the economy. Schnabel emphasized that consumer-price growth is likely to exceed 2 percent for an 'extended period' due to high energy costs, making further tightening necessary.

Schnabel also warned that acting only when inflation feeds into wages would leave policymakers 'behind the curve.' This suggests that the ECB may be preparing to take more aggressive action in the near future.