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[BUSINESS] · Germany, Spain, Greece, Italy, Romania · 39 sources

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ECB's Isabel Schnabel signals potential interest rate hikes

Isabel Schnabel, an Executive Board member of the European Central Bank (ECB), has signaled that further interest rate hikes may be necessary to combat persistent inflation. Speaking in various interviews, Schnabel noted that at current policy rates, inflation is unlikely to return to the 2% target over the medium term.

Several factors contribute to this outlook, including elevated energy costs and geopolitical tensions in the Middle East, which pose significant upside risks to inflation. Schnabel warned that waiting for these pressures to fully manifest in wages could leave policymakers 'behind the curve,' potentially necessitating even more aggressive tightening later.

The Eurozone economy has shown unexpected resilience, supported by fiscal policy, defense spending, and the growth of artificial intelligence. This economic strength, combined with inflation risks, has led market participants to price in a potential 25 basis point increase in September, which would bring the deposit rate to 2.5%.

Entities

Bloomberg · European Central Bank · Eurozone · Germany · Isabel Schnabel · Middle East · Reuters

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Sources

Notenbanken im Zinsdilemma [www.kapitalmarktexperten.de]