ECB's Schnabel Urges More Rate Hikes as Euro-Area Inflation Seen at 3.0%
Updated
Updated · investinglive.com · Jun 28
ECB's Schnabel Urges More Rate Hikes as Euro-Area Inflation Seen at 3.0%
2 articles · Updated · investinglive.com · Jun 28
Summary
Isabel Schnabel said the ECB should keep raising rates, arguing upside risks span food, goods and services even after the US-Iran ceasefire eased energy prices.
The hawkish case rests on oil staying elevated as the Strait of Hormuz reopens only gradually, with higher energy costs already passing through supply chains and manufacturing.
June euro-area CPI due July 1 is expected at 3.0%, down from 3.2%, while core inflation is seen holding at 2.6%—still well above the ECB's 2% target.
The ECB resumed tightening earlier this month for the first time since 2023, and Schnabel also warned that stretched asset valuations and higher leverage could expose financial stability risks as rates rise.
Can Europe's economy withstand both ECB rate hikes and a prolonged disruption of Middle East energy supplies?
With energy shocks driving inflation, are ECB rate hikes a cure or a poison for Europe's economy?
As the ECB tightens, what hidden financial vulnerabilities from the low-rate era are about to be exposed?
ECB Hikes Interest Rates to 2.25% as Eurozone Inflation Hits 3.2% in Wake of Iran War
Overview
Euro area inflation remains well above the ECB’s 2% target, reaching 3.2% in May 2026. This persistent inflation is mainly driven by escalating energy costs, which are a direct result of the Iran war’s negative economic impact, including higher energy prices and disrupted oil supplies. These elevated costs have led to downward revisions in economic forecasts, with the ECB’s Survey of Professional Forecasters cutting 2026 GDP growth to just 0.9%. In response, the European Central Bank has taken decisive action to curb inflation, highlighting the strong link between geopolitical events, energy prices, and monetary policy decisions.