Schnabel Pushes for Another ECB Rate Hike Amid Inflation Concerns

European Central Bank (ECB) Executive Board member Isabel Schnabel is advocating for another interest rate hike to combat inflation. She argues that current policy settings are not tight enough to return inflation to the 2% target over the medium term.

Schnabel pointed out that persistent price pressures and the risk of higher energy costs feeding into wages and services necessitate further tightening. The ECB raised its deposit rate from 2 to 2.25% in June, but left it unchanged in July.

The Governing Council will receive more data before voting on a possible quarter-point rate increase to 2.50% at the September meeting. Schnabel's argument is that waiting for clear second-round effects would mean acting too late, as energy prices can lead to wage increases and price re-pricing by companies.

Germany's factory-gate inflation accelerated to 3% in July, adding to concerns about a rapid return to target. Euro-area inflation reached 2.9% in the same month.