Schnabel Sees More Rate Hikes Needed to Tame Inflationary Pressures

Isabel Schnabel, a member of the European Central Bank's executive board, believes that borrowing costs must continue to rise in order to combat inflation. In an interview with Bloomberg News, she stated that at the current policy rate, inflation is unlikely to return to target within the medium term.

Schnabel pointed out that consumer price growth will likely remain above 2% for a considerable period due to elevated energy expenses. She also warned that delaying action until those costs feed into wages would put policymakers behind the curve.

According to unnamed sources, ECB officials are inclined to approve a rate increase at their September gathering to curb inflationary effects stemming from the Iran war. However, they show limited willingness to commit to further moves after that.