Schnabel: Further ECB Rate Hikes Needed to Combat Inflation

European Central Bank (ECB) board member Isabel Schnabel has reiterated that further interest rate hikes are necessary to combat inflation, citing upside risks from the prolonged conflict in the Middle East and a resilient eurozone economy.

In an interview with Bloomberg News published on August 26, Schnabel emphasized that consumer price growth is likely to remain above 2 per cent for an extended period due to high energy costs. She warned that waiting until those costs fed through into wages would leave policymakers 'behind the curve', and that early prevention of second-round effects is crucial.

The ECB's primary mandate is to maintain price stability, with a 2 per cent inflation target over the medium term. Schnabel stated that at the current policy rate, inflation is unlikely to return to target over the medium term, and therefore further tightening will be necessary.