ECB's Schnabel: Inflation Impact from Iran Conflict Cannot Be Ignored

On June 1, Jin10 reported that European Central Bank Executive Board member Isabel Schnabel emphasized the need to address the inflationary effects stemming from the Iran conflict. Schnabel noted that as price pressures extend beyond the energy sector and the risk of unanchored inflation expectations rises, the ECB can no longer overlook the impact of the conflict. On Monday, Schnabel highlighted that disruptions to energy infrastructure and global supply chains have altered price dynamics in a more lasting manner, suggesting that policymakers may need to respond even if the conflict ends immediately. Schnabel stated that it is premature to determine the exact number of interest rate hikes required, as policymakers will continue to assess upcoming data and developments in the Middle East. "It is too early to say that rate hikes will end after a certain number," she remarked. "We must indeed see what happens next." She pointed out that the current shock differs from previous energy crises, as it increasingly acts as a global demand shock while raising production costs worldwide.